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88–252 PDF 2003

S. Hrg. 108–185

TRANSFORMING THE DEPARTMENT OF DEFENSE

PERSONNEL SYSTEM: FINDING THE RIGHT APPROACH

HEARING

BEFORE THE

COMMITTEE ON 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

JUNE 4, 2003

Printed for the use of the Committee on Governmental Affairs

(

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

ARLEN SPECTER, Pennsylvania 

ROBERT F. BENNETT, Utah 

PETER G. FITZGERALD, Illinois 

JOHN E. SUNUNU, New Hampshire 

RICHARD C. SHELBY, Alabama 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

RICHARD J. DURBIN, Illinois 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

ANN C. FISHER, Deputy Staff Director 

JOYCE RECHTSCHAFFEN, Minority Staff Director and Chief Counsel 

LAWRENCE B. NOVEY, Minority Counsel 

DARLA D. CASSELL, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Collins ................................................................................................. 1

Senator Levin .................................................................................................... 3

Senator Voinovich ............................................................................................. 5

Senator Akaka .................................................................................................. 7

Senator Coleman .............................................................................................. 8

Senator Fitzgerald ............................................................................................ 9

Senator Lautenberg .......................................................................................... 10

Senator Stevens ................................................................................................ 11

Senator Carper ................................................................................................. 12

Senator Sununu ................................................................................................ 13

Senator Durbin ................................................................................................. 14

Senator Pryor .................................................................................................... 16

WITNESSES 

WEDNESDAY, JUNE 4, 2003

Hon. Donald H. Rumsfeld, Secretary, U.S. Department of Defense; accompanied by General Richard B. Myers, Chairman of the Joint Chiefs of 

Staff, U.S. Department of Defense; David S.C. Chu, Ph.D., Under Secretary 

of Defense for Personnel and Readiness, U.S. Department of Defense; and 

Admiral Vern Clark, Chief of Naval Operations, U.S. Navy ............................ 16

Hon. David M. Walker, Comptroller General, U.S. General Accounting Office . 35

Bobby L. Harnage, Sr., National President, American Federation of Government Employees, AFL–CIO ................................................................................. 41

Paul C. Light, Professor of Public Service, New York University ....................... 45

ALPHABETICAL LIST OF WITNESSES

Harnage, Bobby L., Sr.: 

Testimony .......................................................................................................... 41

Prepared Statement ......................................................................................... 74

Light, Paul C.: 

Testimony .......................................................................................................... 45

Prepared Statement with an attachment ....................................................... 95

Rumsfeld, Hon. Donald H.: 

Testimony .......................................................................................................... 16

Prepared Statement ......................................................................................... 55

Walker, Hon. David M.: 

Testimony .......................................................................................................... 35

Prepared Statement ......................................................................................... 60

APPENDIX

International Federation of Professional and Technical Engineers, prepared 

statement .............................................................................................................. 130

Letter dated June 3, 2003 to Senator Akaka from the Senior Executives 

Association, prepared statement ......................................................................... 134

Susanne T. Marshall, Chairman, Merit Systems Protection Board, prepared 

statement with an attachment ............................................................................ 138

Association of Civilian Technicians, Inc., prepared statement ............................ 147

Information from: 

Mr. Chu requested by Senator Levin .............................................................. 156

Mr. Rumsfeld requested by Senator Levin ..................................................... 157

Admiral Clark requested by Senator Akaka .................................................. 158

Page

IV

Questions and Responses for the Record from: 

Mr. Rumsfeld submitted by Senator Spector ................................................. 164

Mr. Chu submitted by Senator Voinovich ...................................................... 167

Mr. Rumsfeld submitted by Senator Shelby .................................................. 168

Mr. Rumsfeld submitted by Senator Akaka ................................................... 169

Mr. Rumsfeld submitted by Senator Carper .................................................. 177

Mr. Rumsfeld submitted by Senator Voinovich ............................................. 179

Mr. Rumsfeld submitted by Senator Lautenberg .......................................... 180

Mr. Walker submitted by Senator Voinovich and Carper ............................. 183

Mr. Harnage submitted by Senator Voinovich ............................................... 188

Mr. Light submitted by Senator Voinovich .................................................... 192

(1)

TRANSFORMING THE DEPARTMENT OF DEFENSE PERSONNEL SYSTEM: FINDING THE 

RIGHT APPROACH 

WEDNESDAY, JUNE 4, 2003

U.S. SENATE, 

COMMITTEE ON GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:37 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Susan M. Collins, 

Chairman of the Committee, presiding. 

Present: Senators Collins, Stevens, Voinovich, Coleman, Specter, 

Fitzgerald, Sununu, Levin, Akaka, Durbin, Carper, Lautenberg, 

and Pryor. 

OPENING STATEMENT OF CHAIRMAN COLLINS 

Chairman COLLINS. The Committee will come to order. 

The primary goal of the Federal personnel system should be the 

recruitment and retention of the highest quality workforce to serve 

the people of the United States. Unfortunately, the antiquated system now in place does not always achieve that goal. Although there 

are many superb Federal employees, bureaucratic barriers make it 

hard to reward their efforts and it has become increasingly difficult 

for agencies to attract and retain employees with technical expertise or special skills. 

The Department of Defense has delivered to Congress a farreaching proposal to grant the Secretary of Defense broad new authority to dramatically restructure the Department’s civilian personnel system, a system that covers some 730,000 Federal workers. 

The Department contends its proposal will provide the flexibility 

and agility needed to respond effectively to changes in our national 

security environment. 

To accomplish this objective, the administration proposes giving 

the Secretary of Defense not only the significant personnel flexibilities that Congress granted to the Secretary of Homeland Security, 

but also additional authority to unilaterally waive several other 

personnel laws. 

Although the administration has submitted a bill that affects virtually every significant aspect of the personnel system, three personnel flexibilities are of particular importance to the Department. 

First, the Department seeks authority to replace the current general schedule 12-grade pay system with a performance-based system through which workers would be compensated according to 

merit, not longevity. Second, the Department wants the authority 

2

to conduct on-the-spot hiring for hard-to-fill positions. And third, 

the Department seeks the authority to raise collective bargaining 

to the national level rather than negotiating with approximately 

1,300 local bargaining units. 

Over the past 4 weeks, Senator Voinovich, who has been a leader 

on human capital issues, and I have reached out to a wide variety 

of interested parties in an attempt to put together a proposal that 

would be both fair and effective. We have been joined in our efforts 

by Senator Sununu, who has long had an interest in our Federal 

workforce, and by Senator Levin, who as the ranking member of 

the Senate Armed Services Committee and as a senior Member of 

this Committee brings a wealth of knowledge and insight to this 

process. Their assistance and support have been invaluable and I 

want to thank them for their efforts. 

I had intended to offer our consensus proposal as an amendment 

to the Senate defense authorization bill. I was dismayed to learn, 

however, that our amendment was not deemed relevant by the Parliamentarian and, therefore, would be ruled out of order. The 

House, however, has included legislation similar to DoD’s plan as 

part of its version of the defense authorization bill. 

Quite simply, I believe that civil service reform of this magnitude 

is far too important an issue for the Senate to remain silent. As 

the conference on the defense authorization bill begins, I hope that 

our efforts in this Committee, which, after all, has jurisdiction over 

the civil service laws, will help shape the outcome of the personnel 

provisions in the Department of Defense bill. 

Our legislation would, among other things, provide the Secretary 

of Defense with the three pillars of his personnel proposal and thus 

would allow for a much-needed overhaul of a cumbersome, unresponsive system. Our bill would grant the administration’s request 

for a new pay system, on-the-spot hiring authority, and collective 

bargaining at the national level. 

In addition, our legislation would enable the Secretary to offer 

separation pay incentives for employees nearing retirement as well 

as to offer special pay rates for highly-qualified experts, such as 

scientists, engineers, and medical personnel. It would also help mobilized Federal civilian employees whose military pay is less than 

their Federal civilian salaries. 

But we would not propose to give the Secretary all that he asked 

for. Instead, we have attempted to strike the right balance between 

promoting a flexible system and protecting employee rights. 

For example, our bill takes a different approach to the issue of 

employee appeals. In contrast to the DoD proposal, our legislation 

does not grant the Secretary the authority to omit the Merit Systems Protection Board altogether from the appeals process. Instead, our legislation calls for a gradual transition from the MSPB 

to a new internal appeals process and requires the Department of 

Defense to consult with the MSPB before issuing the regulations 

creating the new process. In addition, our legislation retains the 

MSPB as an appellate body and gives the employee the option of 

judicial review if that employee is adversely affected by the final 

decision. 

3

Our purpose is to ensure that the civilian employees at the Department of Defense are entitled to safeguards similar to those afforded other employees in the Federal workforce. 

Another important difference is that our bill does not grant the 

authority to the Secretary to waive the collective bargaining rights 

of employees. The Department has repeatedly stated that it has no 

desire to do this. We take the Department at its word and, therefore, do not grant the broad authority it does not intend to use. Instead, our legislation places statutory deadlines of 180 days on the 

amount of time any one issue can be under consideration by one 

of the three components of the Federal Labor Relations Authority. 

This alone should improve the timeliness of the bargaining process 

and prevent the occasional case from dragging on for years. 

The bottom line is, I believe that our proposed legislation would 

give the authority to the Secretary that he needs to manage and 

sustain a vibrant civilian workforce of some 700,000 strong. We are 

working hard to build a consensus on this legislation and to resolve 

these complicated issues in a fair and equitable manner. After all, 

the changes that we make in the Department’s personnel system 

will affect more than one-quarter of the total Federal civilian workforce. We need to get this right. 

I welcome our witnesses today. I look forward to hearing their 

views and insights on this important issue. As our Committee 

Members can see, we have an extremely distinguished panel before 

us. 

Before I turn to our first panel of witnesses, I would like to call 

on my colleagues for opening statements. I would like to begin with 

Senator Levin, whose help has been invaluable in drafting the consensus legislation that we have introduced. He has a great deal of 

experience in Department of Defense issues as a result of his ranking member status on the Armed Services Committee and is actually the senior Member on this Committee, as well, so I am very 

appreciative of his efforts and I would like to call on him now for 

any opening remarks. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Thank you, Madam Chairman. Thank you for 

calling today’s hearing. With this Committee’s jurisdiction over the 

Federal civil service system comes the responsibility for reviewing 

and considering proposed changes to the system, and I particularly 

appreciate our Chairman’s determination to address this issue completely and fairly. This is the way she approaches all issues. She 

has used this approach, as expected, with this issue as well. This 

is an extremely complicated issue with a long history, but I commend her for her determination to look at this objectively and fairly and comprehensively. 

I also join her in welcoming this very distinguished panel. The 

importance of the issue before us is demonstrated by the fact that 

they are here today. In the midst of all their other extremely significant responsibilities, they are here today to talk about an issue 

which obviously, just by their presence, illustrates its significance. 

On April 11 of this year, the administration submitted a legislative proposal that would fundamentally alter the Federal civil service system by authorizing the Secretary of Defense to waive proviVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
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sions of law governing employee performance, pay and allowances, 

labor relations, hiring and firing, training, pay administration, 

oversight, and appeals. The administration proposal did not include 

any specific legislative procedures or processes for the new civilian 

personnel system, however, other than the requirement that the 

new system be ‘‘flexible and contemporary.’’

The Federal civil service system was established more than a 

century ago to replace a patronage system that was characterized 

by favoritism and abuse. As we contemplate the possible reform of 

that system, we must take care that we do not allow those abuses 

to resurface. 

The Defense Department proposal would give the Secretary of 

Defense extraordinarily broad license to hire and fire employees 

and to set employee compensation virtually without legislated restrictions or constraints. This would not only be the greatest shift 

of power to the Executive Branch in memory, it would also put us 

at risk of a return to some of the abuses of the past. 

While it is true that this proposal would preserve the merit system principles, it is not just the principles which are important, but 

also the processes and procedures by which these principles are implemented and enforced. If these processes and procedures are 

toothless, the merit system principles could become empty letters. 

In short, I believe that we need to build some protections into 

any new system to avoid a return to the patronage, political favoritism, and abuse that characterized Federal employment before the 

advent of the civil service system. It is our responsibility to counterbalance the natural temptation for future Department of Defense officials to reward loyalty over quality of performance and 

provide pay and promotions to those who tell senior officials what 

they want to hear. I join in Chairman Collins’ proposal because I 

believe that it would go a long way towards building these critical 

protections into any new system. 

Department of Defense officials have stated that they need this 

new authority so that they can establish an expedited hiring process and institute a pay-for-performance system based on the pay 

banding approach used under several Department of Defense pilot 

programs. However, the administration’s proposal does not even 

mention the words expedited hiring, pay for performance, or pay 

banding, let alone give any indication of how the new system would 

work. 

The current civil service system, as our Chairman has mentioned, is not perfect, and I agree with her and join with her in 

stating that it can be improved. Indeed, every serious review of the 

current system, including both the Clinton Administration’s National Performance Review and the recent report of the Volcker 

Commission, has concluded that improvement is needed. 

For this reason, I supported a series of so-called demonstration 

programs, including the Defense Acquisition Workforce Pilot Program and the Defense Laboratory Pilot Programs, under which 

Congress has authorized the use of pay banding, rapid hire procedures, and other personnel flexibilities by the Department of Defense. Those demonstration projects are widely viewed as having 

been successful and have contributed to the Department’s ability to 

attract and reward qualified personnel. 

5

On the basis of that experience, it is reasonable to consider extending similar authority to other areas of the Department of Defense’s civilian workforce. If we are going to do so, however, we 

have a responsibility to go beyond slogans and to authorize specific 

changes to address specific problems. If we throw out the old system without saying what we are replacing it with, we will find ourselves revisiting this issue again and again, year after year, as we 

try to patch together answers to questions that we should have answered in the first place. 

That is again why I so appreciate the constructive approach that 

the Chairman has taken to this issue and have cosponsored the 

legislation which she has introduced. It does offer specific solutions 

to specific problems. Our bill would give the Department of Defense 

the flexibility that it seeks to establish pay banding, rapid hire authority, a streamlined appeal process, and national level bargaining, but it would do so without giving up the employee protections that are needed to prevent abuse and are needed to make the 

civil service system work. That is real reform. It is workable reform. 

Again, I want to thank our Chairman for her extraordinarily constructive, detailed, and involved effort here and I again welcome 

our witnesses. 

Chairman COLLINS. Thank you very much, Senator Levin. 

I would now like to call on Senator Voinovich, who is the Subcommittee Chairman with jurisdiction over the civil service laws 

and has been the Committee’s leader on human capital issues. He 

has worked very hard on this issue, as I mentioned in my opening 

statement, and I am delighted to call on him for his opening remarks. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. Thank you, Madam Chairman. I thank you 

for holding this hearing on the proposed National Security Personnel System for the Department of Defense. I welcome all of our 

witnesses, and I am especially grateful that Secretary Rumsfeld, 

General Myers, Admiral Clark, and Under Secretary Chu are able 

to join us today. 

Mr. Secretary and General Myers, I commend you for your outstanding leadership during Operation Iraqi Freedom. Our world is 

a safer place because of the coalition you led to liberate the Iraq 

people and prevent a tyrant from using weapons of mass destruction. 

During Desert Storm, I was Governor of Ohio and Commander 

in Chief of the Ohio National Guard, and because of that, paid particular attention to the way we waged war. Unfortunately, we lost 

19 Ohioans in that conflict. The advances in military capabilities 

over the last 12 years are incredible. When I recently visited 

Wright-Patterson Air Force Base in Dayton, I was impressed at 

how proud General Lyles and his staff were of the technology that 

was used in Operation Iraqi Freedom, such as the Global Hawk 

and Predator Drone. 

My discussions with General Lyles took place at a field hearing 

my Subcommittee conducted to examine the status of the civilian 

staff of the Department of Defense. It is hard to believe that there 

6

are 740,000 civilian workers at DoD. That is about 40 percent of 

our entire Federal workforce. And as I noted that day, we must ensure that DoD civilians have the tools and resources they need to 

perform their critical mission. I was pleased that Under Secretary 

Chu testified along with Comptroller General David Walker, and I 

am glad that they are with us again today. 

Madam Chairman, as you know, I have devoted a significant 

amount of my time to improving the culture of the Federal workforce. Over the last 4 years, my Subcommittee has held 13 hearings 

on the Federal Government’s human capital challenges. I have 

worked with some of the Nation’s top experts on public management to determine what new flexibilities are necessary to create a 

world class 21st Century workforce. Some of these include at 

Brookings Institution, the National Academy of Public Administration, the Volcker Commission, Harvard’s Kennedy School of Government, various Federal employee groups, and members of this 

administration. 

Four years ago, I was the primary sponsor of an amendment to 

the fiscal year 2000 defense authorization act that authorized 9,000 

voluntary early retirement and voluntary separation incentive payments through this fiscal year. Of those 9,000 slots, 365 have been 

used at Wright-Patterson Air Force Base in Ohio to start reshaping 

their workforce. Even for such a modest reform proposal, I must 

tell you, it was like going through the Maginot Line to achieve this 

important authority for the Department of Defense. I will never 

forget the grief I went through just to get that little bitty change. 

[Laughter.] 

I am gratified at how far we have come since 1999 and I am 

pleased that workforce reshaping reforms have helped make a difference for the Department. However, I share the concern of the 

Chairman and Senator Levin that some of the provisions of the 

current proposal go too far. 

For example, the proposed removal of oversight authority and jurisdiction of the Office of Personnel Management and the Merit 

Systems Protection Board. I am also concerned, as Mr. Walker has 

observed at previous hearings, that DoD does not yet have the appraisal mechanisms in place to allow for a successful pay-for-performance system. Finally, as Dr. Chu knows, I am concerned about 

DoD’s announced staffing reductions. These reductions are already 

impacting the Department’s ability to reshape the civilian workforce, as was testified to by General Lyles at Wright-Patterson Air 

Force Base. 

Madam Chairman, on many occasions in the Governmental Affairs Committee hearings, I have referred to the observations of 

former Defense Secretary James Schlesinger, a member of the U.S. 

Commission on National Security in the 21st Century, concerning 

the importance of Federal employees in national security agencies. 

Secretary Schlesinger noted that, ‘‘Fixing the personnel problem is 

a precondition for fixing virtually everything else that needs repair 

in the institutional edifice of the United States national security 

policy.’’

Mr. Secretary, I recognize we have different opinions on some of 

the key issues in your proposal, but I commend you for your zeal 

and your commitment. I know that because of your dedication to 

7

solving this problem, we will finally make some real progress in 

this area. While I have some reservations about the breadth and 

depth of DoD’s initial proposal and the House bill, I am delighted 

you are here and that we are finally tackling the human capital 

challenges at the Department of Defense. It is long overdue. Your 

presence here and your efforts in the House indicate that the light 

bulb has gone on and substantial progress will be made as a result 

of your efforts. 

In that regard, Senators Collins, Levin, Sununu, and I have introduced S. 1166, the National Security Personnel System Act. We 

believe that our bipartisan legislation helps your efforts, although 

taking a different tack than your proposed National Security Personnel System. With the new threats of the post-September 11 

world, it is appropriate that the Department of Defense is transforming its capabilities in force, and to achieve that goal, it is imperative the Department have the ability to reshape its workforce. 

As a former mayor and governor, I know effective human capital 

management requires communication, collaboration, patience, and 

time. I believe managers should work with employees to establish 

policies that can help an agency accomplish its mission. I am 

pleased that the Department of Homeland Security is working with 

its employees to establish its personnel system, and I am pleased 

that some of the provisions for mandatory interaction between 

management and labor are contained in your proposed personnel 

system. It is extremely important that the employees be involved 

in shaping the new system. 

Madam Chairman, I am sure that we are going to have a lively 

and engaging discussion with our distinguished witnesses today. 

Thank you for being here. 

Chairman COLLINS. Thank you, Senator Voinovich. 

I am now pleased to call on the Ranking Member of the Subcommittee, another long-time leader on civil service issues, Senator 

Akaka. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Madam Chairman. I want 

to thank you for your personal attention to this issue and for the 

work you have done in forging a bipartisan bill. 

I also want to thank Senator Levin and Senator Voinovich for 

your hard work and your efforts on this issue. The manner in 

which you have addressed the DoD personnel proposal is testament 

to the respect and commitment this Committee has for our Nation’s 

Federal workforce. 

I also wish to join my colleagues in extending my welcome and 

appreciation to our very distinguished witnesses. 

About the same time that the Department unveiled its personnel 

proposals, the GAO reported that DoD’s human capital strategic 

plans lacked key elements. Most of the Department and its components’ human capital goals, objectives, and initiatives were not 

aligned with the overarching missions of the organization. In addition, the plans lacked information on skills and competencies needed to carry out the Department’s missions. GAO found that the Department’s civilian workforce shrank 38 percent from 1989 to 2002 

and positions were eliminated without regard to the skills and comVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
8

petencies need to carry out agency mission. The lesson learned was 

that there must be strategic planning before taking major personnel actions. 

I just don’t see how providing the Department the wide-ranging, 

broad authority it seeks without appropriate safeguards in place 

will appropriately address the shortcomings noted by GAO. I fear 

that approving DoD’s proposal or the House provisions would give 

the Department of Defense the license to conduct surgical strikes 

on the civilian workforce. 

For example, DoD seeks to waive Chapter 75 and 77 of Title 5 

dealing with adverse actions and employee appeals. This would 

allow the Department to waive key employee rights, namely the 

right to a hearing on the record before an independent third party, 

current discovery rights, and the right to counsel. 

It is unclear why the Department needs the authority to waive 

such important employee protections. Congress guaranteed these 

safeguards to ensure that the Federal workforce is treated fairly, 

in an open and transparent manner, and free from political pressures. It is inappropriate to request such authority without specific 

guidelines, credible management plans, accountability to Congress, 

and transparency of decisions. 

As the ranking member of the Armed Services Readiness Subcommittee and co-chairman of the Senate Army Caucus, I am committed to a strong and viable military, and as the Ranking Member 

of the Governmental Affairs Subcommittee I am responsible for the 

Federal appeals process, and equally committed to protecting the 

rights of Federal employees. 

Madam Chairman, I appreciate you holding today’s hearing and 

I look forward to the testimony and discussion that will follow. 

Thank you. 

Chairman COLLINS. Thank you, Senator. 

I am now pleased to call on Senator Coleman, who has a great 

deal of experience with public employees as a result of serving as 

mayor. Senator Coleman. 

OPENING STATEMENT OF SENATOR COLEMAN 

Senator COLEMAN. Thank you, Madam Chairman. I want to join 

in thanking you for your leadership and your willingness to take 

on this tough issue. 

This is a tough issue. When I got elected mayor in 1993, I was 

told that the toughest, biggest problems I was going to have were 

going to be on the personnel side and the human resources side 

and folks were right. So I applaud you for your willingness. 

The reality is that we shouldn’t be accepting a lesser standard 

of performance in government. It was very hard for me as a mayor 

to fire employees who weren’t performing, and somehow this sense 

that we have a lesser standard that we will tolerate more insufficiency of performance on the public side shouldn’t be. 

So the challenge, then, is how do we do that? How do we maximize the human capital? How do we provide, as Senator Voinovich 

talked about, a world class 21st Century workforce and at the same 

time provide the kind of balance that we need? I want to applaud 

the Secretary for taking this on. 

9

People talk about making change in government. It is not like a 

race car going around the track. It is like getting on an ocean liner 

and just kind of pointing in the right direction and hopefully it gets 

there. We have got to be able to move faster than that. We have 

got to be more efficient than that. We have got to be more capable 

than that. The American public deserves that. 

So I want to applaud the Secretary. We certainly need to retain 

safeguards against arbitrary management actions. I don’t think 

there is any question about that. We need to increase hiring flexibility and allow managers to reward the best employees. The American economy runs on paying for performance and rewarding quality and we should expect no less from government. 

I look forward to hearing the testimony. I look forward to working with the Chairman in a bipartisan way, the other Members of 

the Committee, on the proposal the Chairman has set forth. I think 

we can provide that balance, we can provide that equilibrium, but 

we need to make changes. The current system is not one that 

Americans should accept. So again, I want to applaud the Secretary for bringing forth this proposal. 

Chairman COLLINS. Thank you, Senator Coleman. 

I am now delighted to call on the Senator from Illinois, Senator 

Fitzgerald. 

OPENING STATEMENT OF SENATOR FITZGERALD 

Senator FITZGERALD. Thank you, Madam Chairman. Mr. Secretary, General Myers, Admiral Clark, and Dr. Chu, I want to 

thank you for appearing here today and also congratulate you on 

the success in Iraq. It is an outstanding job and an important battle won in the longer war on terrorism. 

The subject of today’s hearing is transforming the Department of 

Defense’s personnel system for the 21st Century. This is a vital 

issue affecting our national security and I want to thank Chairman 

Collins for holding this timely and important hearing today. 

Mr. Secretary, you are to be commended for undertaking a monumental challenge at a challenging time in our Nation’s history. 

That challenge is transforming our defense structure and bringing 

sound 21st Century management principles to a monolith of the 

Cold War. Our Nation is deeply engaged in the global war on terrorism. To fight and win this war, the Department of Defense 

needs sufficient flexibility in its civilian personnel system to expedite hiring, reward performance, and assign employees as necessary. 

The terrorists who operate from the caves and threaten our country are not mired in bureaucracy. We cannot allow our red tape to 

become an ally of the al Qaeda. Therefore, more needs to be done 

to make the Department of Defense as agile as possible to confront 

these emerging threats, and reforming the Department’s personnel 

process is an important step in that direction. 

It is important for the Senate to have a healthy debate over the 

precise dimensions of the proposed National Security Personnel 

System. However, it is also important to recognize the main objectives the proposed system is designed to accomplish. 

First, the National Security Personnel System would provide the 

Department of Defense with flexibility to manage its employees. 

10

This will help the military to meet the rapidly changing security 

threats of the Nation by allowing managers to utilize employees’ 

skills and services more effectively. 

Second, it would strengthen the Department’s performance and 

improve its financial management by rooting out fraud and abuse. 

When former Secretary of Defense James Schlesinger and Admiral 

Henry Trane testified last year before Congress, they stated that 

fixing personnel problems would pave the way for needed reforms 

in U.S. national security policy. 

Third, it would provide for a swift and efficient defense support 

structure. The current civil service system uses a one-size-fits-all 

approach that does not suit the daily demands on the military for 

agility in today’s security environment. Presently, it can take up to 

3 months or longer for the Department to hire a civilian employee. 

The long hiring and promotion process discourages highly qualified 

candidates while at the same time impedes the mission of the Department. 

I look forward to working with this Committee on legislation that 

would provide much needed flexibility to the Department of Defense to organize its more than 700,000 civilian employees. 

Thank you for being here today, Mr. Secretary, and I look forward to your testimony. Thank you, Madam Chairman. 

Chairman COLLINS. Thank you, Senator. Senator Lautenberg. 

OPENING STATEMENT OF SENATOR LAUTENBERG 

Senator LAUTENBERG. Thank you very much, Madam Chairman. 

I don’t have a formal statement. I will just very quickly say that, 

before we get into the hard part of this exercise, I want to commend Secretary Rumsfeld, General Myers, and all those who 

served to accomplish the military objective that we had. Hats off 

to you. It was very well done. We are proud of those who did it. 

That doesn’t mean I don’t question what some of the outcomes have 

been, but I do salute all of you, to use the expression. 

But I do want to discuss in some detail this suggestion that we 

transfer this huge group of employees, over 750,000, I believe is the 

number, to a different kind of a system, because the one that is in 

place doesn’t work perfectly. But Mr. Secretary, I think you know 

I had a long experience in the corporate world before I got here and 

the company I helped start many years ago today employs over 

40,000 people. It is a nice American success story, three poor boys 

who started a company that succeeded. 

I found one thing, that the people who work for me in government now who are trying this a second time—the first 18 years, I 

didn’t fully learn my lesson, so I came back to learn more—but one 

of the things that I have found is that the dedication, the commitment of those who work under the Federal system is unmatched. 

And again, I take it from my corporate experience, one of America’s 

immodestly most successful companies, and I have seen the kind 

of output, throughput, commitment that is hard to find, and especially since a relatively modest wage scale is the reward for that. 

The things that do supply some satisfaction, both psychic and 

real, are the benefits, so-called, and one of those benefits is the permanency of the employment, the ability to know that you have a 

job until retirement comes along. 

11

So thank you, Madam Chairman, for the opportunity to express 

that and I look forward to hearing from our witnesses. 

Chairman COLLINS. Thank you. Senator Stevens. 

OPENING STATEMENT OF SENATOR STEVENS 

Senator STEVENS. Thank you, Madam Chairman. I welcome all 

of you after a job well done and I consider you to be personal 

friends. I don’t think there is a stronger supporter of the defense 

establishment in the Congress than I am. 

I have served in the Executive Branch, both in civil service and 

as Presidential appointee twice, and I have been here through the 

periods of time of crisis in the past, from Vietnam, in particular 

during the Nixon fiasco. I believe that you are on the right track 

to modernize the concepts of dealing with personnel, civilian personnel for the Department of Defense, but I have got to ask you, 

what is the rush? 

This bill came to us right after a success in the field. To some 

people, it implies that, somehow or other, civilian employees were 

responsible for some of the things that might have gone wrong in 

that period. I don’t believe that is the case, but those are comments 

I got from home. 

Beyond that, I am part of a group that was the author of creating 

a new executive civil service. The executive civil service concepts 

were to get us people trained and committed to public service who 

agreed upon request to transfer to any agency, including the Department of Defense, and I believe there have been those people in 

civil service who transferred to and from the Department of Defense. I find nothing in this bill that authorizes that. 

There are some laws in this bill that I don’t understand. I do believe that management should have greater ability to hire, particularly in times of stress, such as wars and emergencies, but I do believe there is an absolute necessity for a committed group of people 

who have decided to make civil service and the Department of Defense their careers, who can be protected against political change 

and personnel change above them, and can know that we value 

them as civil servants. Had we not had such a group during the 

period after the Nixon resignation and the changes that took place 

then, I don’t think we would have had a stable government. They 

were the backbone of our society. 

I think in this bill, there is a hint of discouragement to someone 

who is just out of college to think that he or she can set a goal to 

be a career civil servant in the Department of Defense. Instead, the 

emphasis seems to be that right now, we should hire the best and 

the brightest to do whatever job there is without looking anywhere 

to see who is in the Department that ought to be qualified for that 

job first. 

I want to work with you, Madam Chairman, as a former Chairman of this Committee, and I want to work with the Department 

for the change that has been recommended to the Appropriations 

Committee as to how to handle money for all personnel, both civilian and military. These are sweeping changes and I don’t think 

there is any rush. 

I remember so well when I came here when someone told me, 

Mr. Secretary, that the Senate is sort of like the saucer in a cup 

12

of coffee. You pour it a little bit, what comes over from the House, 

in that saucer and see how it tastes after it has cooled a little bit. 

So I hope you will understand, as far as I am concerned, you 

have got a lot of great work in this bill that you suggested, but it 

is going to take some time to digest and it is going to take some 

time to hear those people who are going to be affected most, and 

they are the people who are mid-career right now who, I hope, 

some of them, at least, will make a decision to become career civil 

servants. 

I congratulate you for what you have done and I particularly congratulate the command of the uniformed services. Mr. Secretary, 

you and your people have just done such an admirable job. I told 

someone the other night that my generation was called the greatest 

generation. This generation is all volunteers. Most of us were draftees. Every single one of the people you commanded was there because he or she chose to be there. That is what I would like to see 

for the whole Department, a Department of people who choose to 

be there and know that we will protect them once they make their 

decision. 

I have got to go to another hearing. I thank you very much. 

Chairman COLLINS. Thank you very much, Senator Stevens. 

I would ask my remaining colleagues if they could give very brief 

statements, since the Secretary’s schedule is tight, and I would call 

now on Senator Carper. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Why did you say that just before I spoke? 

Chairman COLLINS. I apologize, Senator. 

Senator CARPER. My reputation precedes me. [Laughter.] 

Mr. Secretary, it is very good to see you, and Admiral Clark, welcome. It is always nice to have a Navy man in the room. General 

Myers, we have seen a lot of you. We welcome you. And Dr. Chu, 

thank you for coming. 

Mr. Secretary, your back has been covered by former Congressman Pete Geren. He is an old colleague and we are delighted to 

see him, and we are watching carefully to see if his lips move when 

you speak, so we will see how that goes. [Laughter.] 

I have a prepared statement I would like to offer for the record, 

if I could, Madam Chairman. 

Chairman COLLINS. Without objection. 

[The prepared statement of Senator Carper follows:]

PREPARED OPENING STATEMENT OF SENATOR CARPER 

Thank you, Madam Chairman. I am pleased that this Committee is holding a 

hearing today on proposed changes to the Defense Department’s civilian personnel 

system. As my colleagues know, these are very difficult issues. Those of us who 

served on this Committee during the 107th Congress when we considered the Homeland Security Act should be especially aware of that. 

The Federal civil service was created in part to separate from the political process 

those workers who provide essential services to the American people. The old system, in which employees were often thrown out with every change in administration, bred nepotism, bribery and poor government service. I am concerned, then, 

that the Defense Department proposal we are considering today essentially allows 

the Secretary of Defense to remove 700,000 civilian employees from the civil service 

and put them under new work rules which can be changed at any time without any 

input from Congress. 

13

That said, none of us should pretend that work rules at the Defense Department 

and a number of other departments and agencies do not need to be studied or 

changed. That is why I commend Chairman Collins for working with Senator Levin 

and others to develop S. 1166, a bipartisan bill that allows for change within the 

Defense Department’s civilian workforce but does not give the Secretary of Defense 

the sweeping authority he seeks. 

S. 1166 is far from perfect, however. In addition, the Defense Department has yet 

to demonstrate to my satisfaction the need for the kinds of dramatic changes they 

ask for. Our armed forces just finished fighting two very successful wars in the Middle East. The 2,000 civilian employees at the Dover Air Force Base in Delaware who 

I represent played a significant role in both conflicts in providing the strategic airlift 

capability that brought supplies, equipment and personnel to the battlefield. I know 

of no personnel problem occurring at Dover or anywhere else during the conflicts 

in Afghanistan and Iraq that threatened our national security or hindered the military’s ability to fight. 

It might well be best, in my belief, if any attempt to reform the civil service were 

a government-wide initiative. Any department—or agency—specific measures should 

be narrowly tailored to address specific agency needs. Unfortunately, what the Defense Department is asking for is far from being narrowly tailored. It is my hope 

that this Committee can continue to work in a bipartisan fashion to study what 

needs to be changed at the Defense Department and develop legislation that accomplishes the Department’s goals in a way that is fair to employees. The Chairman’s 

legislation is an excellent start and I commend her again for her efforts.

Senator CARPER. I am delighted that you and, I think, Senator 

Levin and others on both sides of the aisle, have offered legislation 

that deals with some of the issues that are going to be spoken to 

at today’s hearing and I think this is especially timely, coming at 

the end of the war in Iraq and not long after military action in Afghanistan, where we can actually look at how the current rules 

with respect to personnel, civilian personnel, have helped or hindered our ability to extend our military might around the world, 

protect our security, and to make sure that our interests around 

the world are addressed. 

So this is very timely and we look forward to hearing what you 

have to say. I also want to look at it in the context of the authorization we provided for the new Department of Homeland Security, 

whether what they have is working well, and if so, how that might 

be extended to the Department of Defense. 

Again, Madam Chairman, most timely, and I think I did that in 

a minute. 

Chairman COLLINS. You did. Thank you so much. 

Senator Sununu is a cosponsor of the legislation. I appreciate his 

support and I would call upon him now. 

OPENING STATEMENT OF SENATOR SUNUNU 

Senator SUNUNU. Thank you. Welcome, Mr. Secretary. No one 

will ever say of Secretary of Defense Donald Rumsfeld, he feared 

change. [Laughter.] 

But I think it is appropriate and important that that is the case 

because we have a whole new set of national security challenges 

and that has already required and will continue to require new organizational structures, new priorities, and new sets of initiatives 

to protect our country. I think, I believe most of the Committee 

Members recognize that and I hope they embrace that need for 

change, as well, and I think that is what we are here to talk about 

today. 

I am pleased to have supported the Chairman in working to craft 

legislation that does accomplish the goals of change and modernizaVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00017 Fmt 6633 Sfmt 6601 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
14

1The prepared statement of the International Federation of Professional and Technical Engineers appears in the Appendix on page 130. 

tion within the DoD civil service. As you well know, the proposal 

that she has crafted is not 100 percent of what Defense was looking 

for, and we are going to talk about that today. But I don’t for a 

minute believe that is because the motives of Defense in putting 

forward this proposal were bad or were weak in the least. This isn’t 

about surgical strikes on any employees. It is not about retribution. 

It is not about blame. It is about creating a defense system that 

does transform and modernize the Pentagon and that ensures that 

we can face these new national security challenges. 

The proposal that has been offered protects their rights of collective bargaining and mediation and so forth, but at the same time, 

it does accomplish what I hope, I believe some of the principal 

goals of your proposal has been, and that is to establish a pay for 

performance, to establish much greater flexibility in hiring, which 

I don’t think is a bad thing and I think will only strengthen the 

opportunity that the Pentagon creates for new entrants and, of 

course, move toward national level bargaining, which only makes 

common sense. 

I am excited that these changes are occurring. I think there is 

going to be a lot of work to be done, and I am sure a lot of give 

and take in making this proposal, legislation, as strong as it can 

be. I look forward to working with you and with Madam Chairman. 

I would finally just ask unanimous consent that I might be able 

to submit some testimony from the Federation of Professional and 

Technical Engineers, being a former engineer and maybe being an 

engineer again someday. I have appreciated working with the 

IFPTE and would ask unanimous consent to submit their testimony for the record.1

Chairman COLLINS. Without objection. 

Senator SUNUNU. Thank you very much. 

Chairman COLLINS. Thank you, Senator. Senator Durbin. 

OPENING STATEMENT OF SENATOR DURBIN 

Senator DURBIN. Thank you, Madam Chairman for this hearing, 

and I thank the Secretary and those who have gathered with him. 

Mr. Secretary, I don’t know if you are aware that General Myers 

recently visited Chicago. If I am not mistaken, he was at the Memorial Day parade. I am sorry I couldn’t join you, but I am happy 

to have had you there. 

General MYERS. It was a great day. Thank you. 

Senator DURBIN. I am going to submit my statement for the 

record in the interest of giving you the chance to make your statement. But I do believe that what is at issue here at this hearing 

is fairly fundamental. We have to answer the following questions. 

Is collective bargaining inconsistent with quality performance? Is 

membership in a union inconsistent with pursuing the goals of national security? Is our existing Federal workforce incapable of 

meeting the challenges of the 21st Century? 

I think those are all fundamental questions. We debated some of 

them in the course of creating the Department of Homeland Security. We will debate them again today. 

15

I think those who view collective bargaining in a negative context 

see it as part of bureaucracy, featherbedding, a contentious work 

atmosphere. But there are positive sides to this which I think we 

must not overlook. It really does, in a way, give us a chance to create professional employees who are rewarded without fear of political retribution and unfair treatment by their superiors. It also dignifies work. It says to people, you will have a voice in your destiny. 

You are not just a pawn to be moved on a board, taken off when 

necessary, put back on when necessary. You have a place. You 

have a voice. And I think that is what is at the heart of this debate. 

I want to salute the Chairman and Senator Levin and Senator 

Voinovich in particular, because he has devoted more of his time 

as a U.S. Senator to professionalize the Federal workforce than any 

one of us. I have been to many of those hearings. George, you have 

led the way on this and I am glad that you are part of this conversation today. 

Thank you for being here, Mr. Secretary. 

[The prepared statement of Senator Durbin follows:]

PREPARED OPENING STATEMENT OF SENATOR DURBIN 

Thank you, Senator Collins, for scheduling this hearing to examine the Department of Defense’s proposed civilian personnel reforms. 

I know that you, Senator Levin, Senator Voinovich, and many others from our 

Committee, have worked tirelessly over the past several weeks to respond to the Department of Defense’s personnel reform proposal. You have developed legislation 

that provides many of the Department’s requested personnel flexibilities. However, 

you have done this while making sincere efforts to balance these new flexibilities 

with the continued responsibility to protect the rights of the Department’s vast civilian workforce. Let me take this opportunity to say that I appreciate your efforts. 

I would also like to thank each of the witnesses appearing before this Committee 

today. I look forward to hearing your testimony and hope to gain further insight 

into the issues surrounding the proposed reforms. 

The civil service system in this country as we know it today was developed over 

the past century. The laws governing the system were created to ensure that Federal jobs were awarded on the basis of merit and competence, and not on the basis 

of political patronage. This system has provided, and continues to provide, vital protections to Federal employees. 

Last year, Congress passed the Homeland Security Act which provided various 

waivers to personnel protections created as part of our civil service system. The rationale behind this decision was that more than 20 different Federal agencies operating under different personnel systems were coming together to form a new department, and the Secretary of Homeland Security needed the ability to efficiently organize the workforce. 

Now the Department of Defense has requested similar personnel reforms to those 

given to the Department of Homeland Security. However, the Department of Defense’s proposal will affect approximately 700,000 civilian employees, which is almost one-third of the Federal civilian workforce. This is over four times the number 

of employees affected by the Homeland Security Act. Also, unlike with the Department of Homeland Security, the Department of Defense has failed to provide a reasonable justification for its requested personnel reforms. 

Because of the quantity of employees affected, and because these personnel reforms, if enacted, could serve as precedent for reform for the rest of the Federal 

Government, we must be cautious and deliberate about the type of personnel system 

we are willing to authorize for DoD. This is especially true when we consider that 

we do not yet know the outcome of the personnel reforms provided to the Department of Homeland Security last year. 

First and foremost, we must ensure that any new personnel system protects the 

rights of Federal employees. Employees must have meaningful due process and appeal rights. If pay and hiring flexibilities are incorporated, DoD must have management systems in place to ensure any new personnel system operates with equity and 

minimizes the chances for political abuse. Finally, collective bargaining rights for 

16

1The prepared statement of Secretary Rumsfeld appears in the Appendix on page 55. 

employees must be preserved so that every employee has a voice in the personnel 

system affecting him or her. I believe Senator Collins has made significant strides 

toward successfully addressing each of these issues. 

I am anxious to learn more from Secretary Rumsfeld and the other witnesses from 

the Department of Defense about the apparent urgent need for such sweeping personnel reforms, especially when the current personnel system appeared in no way 

to hinder efforts during the war in Iraq. I hope you are prepared to provide us with 

a justification for the proposed reforms and will detail DoD’s use of current statutory personnel flexibilities. 

Once again, I want to thank Senator Collins for calling this timely hearing. I look 

forward to continuing my work with you on this issue.

Chairman COLLINS. Thank you. Senator Pryor. 

OPENING STATEMENT OF SENATOR PRYOR 

Senator PRYOR. Thank you, Madam Chairman I wasn’t going to 

say anything other than thank you for having this hearing today. 

It is very important and it is very important for our long-term security. It is also very important for the Senate to hear these matters and try to have our oversight responsibility fulfilled. So thank 

you for doing this. 

Chairman COLLINS. Thank you. 

Well, at long last, we now will move to our first panel of witnesses. I want to thank you for your patience. As you can see, this 

issue is of great importance to many Members who were eager to 

express their views on it. 

I want to welcome our Secretary of Defense, Donald Rumsfeld. 

I want to join my colleagues in commending you for your outstanding leadership of the war against terrorism. We are very 

pleased to have you take the time today to be with us to present 

the Department’s views. 

Accompanying the Secretary are General Richard B. Myers, the 

Chairman of the Joint Chiefs of Staff; Admiral Vern Clark, the 

Chief of Naval Operations; and Dr. David Chu, the Under Secretary of Defense for Personnel and Readiness. Welcome. 

Secretary Rumsfeld, you may proceed. 

TESTIMONY OF HON. DONALD H. RUMSFELD,1 SECRETARY, 

U.S. DEPARTMENT OF DEFENSE; ACCOMPANIED BY GENERAL RICHARD B. MYERS, CHAIRMAN OF THE JOINT CHIEFS 

OF STAFF, U.S. DEPARTMENT OF DEFENSE; DAVID S.C. CHU, 

PH.D., UNDER SECRETARY OF DEFENSE FOR PERSONNEL 

AND READINESS, U.S. DEPARTMENT OF DEFENSE; AND ADMIRAL VERN CLARK, CHIEF OF NAVAL OPERATIONS, U.S. 

NAVY 

Secretary RUMSFELD. Thank you very much. Madam Chairman, 

Members of the Committee, I thank you for your statements and 

comments and interest and also for the opportunity for us to discuss this proposal by the President for the National Security Personnel System. 

As was mentioned, it is extremely important to the Department 

of Defense. That is clear by the presence of the Chairman of the 

Joint Chiefs of Staff, by the Chief of Naval Operation, by Under 

Secretary Chu, who has spent much of his life and leads the Pentagon effort with respect to these matters. 

17

As the Members well know, we are in a new security environment, an unprecedented global war on terror, and we need to be 

able to deal with the emerging new threats with a Department of 

Defense that is fashioned for the information age and the 21st Century. The threats we are facing are notably different, as each of the 

Senators here know well. And to deal with the new threats, we believe we not only need new military capabilities that are flexible, 

light, and agile so we can respond quickly and deal with surprise, 

but we also need a Department that operates in a way that enables 

it to demonstrate flexibility, as well, so that it can respond skillfully. 

Today, we just simply don’t have that kind of agility. In an age 

when terrorists move information at the speed of an E-mail or 

money at the speed of a wire transfer and fly around in commercial 

jetliners, we still do have bureaucratic processes of the industrial 

age as opposed to the information age. Consider a few examples. 

Today we have, I am told by Dr. Chu, some 300,000 to 320,000 

uniformed personnel, men and women in uniform, who volunteered 

to serve in a military capacity performing non-military jobs. Now, 

there is something wrong with that picture. I suspect we also have 

some very large number of contractors performing tasks that ought 

to be performed by career civil service personnel. 

Three-hundred-and-twenty-thousand military people performing 

civilian functions is more than two-and-a-half times the number of 

troops that were on the ground in Iraq when Baghdad fell, and 

why is that? Well, it is because managers are rational. They have 

a task, they are going to be held accountable for that task, and 

they are asked to do it. 

So they go out and they reach for somebody that can help them 

do that and they reach for military people because they know they 

can bring them in, they can calibrate them, they can move them, 

transfer them someplace else when the time comes, and they give 

them the flexibility to do the job that they are being held accountable to perform. Or they reach for civilian contractors because they 

know they can do the same thing. They can bring them in, ask 

them to do a job, stop them from doing the job, move them where 

the job needs to be done. And they avoid reaching for the career 

civil service. 

That is why we have 320,000 military people doing civilian jobs, 

because managers are rational. They can do those things in the 

contracting world and in the military world without a lot of delays 

or bureaucratic obstacles. But they can’t do that with the civil service, unfortunately. 

The unwillingness to put civilians into hundreds of thousands of 

jobs that do not need to be performed by the uniform or by contractors really puts a strain on our system. It is not right, especially 

at a time when we are calling up the Guard and Reserve and asking them to serve, it is not right to have that many military personnel doing civilian functions at a time when we have stop loss 

imposed and we are not letting people out who have completed 

their tours and are asking to be released from the military and we 

are preventing that because we need them on active duty. 

It has to be also demoralizing for the civilian personnel themselves. These are patriotic, terrific people, and we all know that 

18

and you have mentioned that. They come into government because 

they want to make a contribution, and when a challenge arises or 

a crisis and their skills and talents are needed, they want the 

phone to ring. But if the phone doesn’t ring, the phone rings for 

the military or the phone rings for contractors but not for the civilian personnel, it has to be demoralizing. 

Consider this. In Operation Iraqi Freedom, 83 percent of the civilians that were deployed into the theater of central demand were 

contractors. Only 17 percent were civilian Federal workers. Why 

would that be the case? Well, it is because in most cases, the complex web of rules and regulation prevents the Department managers from moving DoD civilians to new tasks quickly. As a natural 

result, the managers turn to the military or the private contractors. 

Because of these rules, we have to cope with that we are losing talented young people to private sector competitors. 

When the DoD recruiters go to a job fair at a college and they 

walk in and the person sitting next to them is from a corporation, 

the corporation can offer that young person looking for a job a job. 

They can say, here is what your salary will be. Here is what the 

bonus will be. Here is where you will work. Say yes, no, or maybe. 

What does the government person from DoD do? They walk into 

the job fair and all they can do, sitting right next to a corporation, 

all they can do is hand them a ream of paper to fill out and tell 

them, sorry, we can’t offer you a job. Fill all this out. It will take 

months before we will know. And I guess it should come as no surprise that many talented young people are working somewhere 

other than the Department. 

This is a problem that will grow more acute every year as the 

baby boomer generation employees start to retire. As Members of 

this Committee, you have been told, as I have, that it is estimated 

that up to 50 percent of the Federal employees will be eligible to 

retire over the next 5-plus years. According to one institute, a recent survey of college students found that most would not consider 

a career in government because, among other things, the hiring 

process is byzantine. 

I served on the first Volcker Commission on public service and 

I was over with Paul Volcker yesterday and he was discussing this 

problem as a very serious one, and some studies they have done 

of young people’s attitude about government service. The future of 

our national security depends on our ability to make it less byzantine and less burdensome on the employees. 

In addition, the current system prevents us from dealing effectively with fraud. I am told that the recent scandals you have read 

about regarding the abuse of government purchasing cards, that 

with respect to military—they were being used to buy cameras and 

various things that they shouldn’t have been used to buy for. With 

DoD personnel, uniformed personnel, if abuse like that occurs, we 

have the ability to garnish their wages and we can recover the stolen funds, but not so with civilian personnel. In fact, Dr. Chu tells 

me that DoD has been negotiating now for more than 2 years with 

more than 1,300 union locals for the right to garnish wages in the 

event that there is fraud in the use of purchasing cards, and we 

still have 30 more unions to go. 

19

Now, I think it is unacceptable that it takes us years to try to 

deal responsibly with employees that are stealing the taxpayers’ 

money. If a private company ran its affairs that way, it would go 

broke and it ought to go broke. 

There are other such examples that the Chief of Naval Operations, Vern Clark, and others can mention. 

I would like to interrupt my comments for a moment and let Admiral Clark, who has invested an enormous amount of time on this 

subject—and I know Dick Myers has a statement after Vern Clark 

and I complete my remarks, but I think, Vern, you might want to 

comment on some of the things you are wrestling with. 

Admiral CLARK. Thank you, Mr. Secretary and Madam Chairman. It is great to be with you this morning. 

Let me just cut right to the chase. I am encouraged by the support of all the Members of this Committee and the recognition that 

we need to reform the system. I have a responsibility given to me 

by law, Title 10, that lays out what Vern Clark is responsible for, 

and it is straightforward. The law says, organize, train, and equip 

the force. And then I turn it over to guys like Tommy Franks, who 

go and command and lead and fight the Nation’s wars. 

The fact of the matter is, and I wrote down some of the things 

that were said here, we do have to recruit and retain the right people to have the kind of fighting force that will win tomorrow’s wars. 

I couldn’t agree more with, Madam Chairman, your comment that 

the system today is not responsive, and that is the problem. I also 

couldn’t agree more, Senator Voinovich, your comment that James 

Schlesinger said that you have to fix the personnel system before 

any of the other pieces are really going to be whole. 

And I would like to testify, and many of you have heard me testify in other committees—this is the first time I have been to this 

Committee—but in the military committees that on the military 

side, I believe that in the Navy, we have proven that. For 3 years, 

we have had as our No. 1 priority the battle for people, and what 

happened in Operation Iraqi Freedom and Enduring Freedom happened because our personnel readiness is better than it has ever 

been before. 

But my whole personnel system is not just the uniformed piece, 

and the Secretary talked about 300,000 uniformed members, and 

so forth. It is, and this is the thing that I have learned since I have 

been in this position, that it is the combination of the military 

structure, it is my reserve structure, it is the 200,000 civilians that 

I have, and Secretary England gave me the number when we were 

researching this that I have fundamentally 234,000 contractors in 

the system and they are in the system because of the principles 

and the faults with the civilian personnel system that the Secretary is outlining. 

I can give you case after case where the lack of responsiveness 

that we have in our civilian personnel system is preventing us from 

having the right kind of system to make our Navy and the rest of 

our military what it needs to be. If the rest of the Chiefs were sitting here, and fundamentally, I am here as one of them, they all 

have the same kinds of problems. They would tell you that we—

and my belief is that no navy is going to go toe-to-toe with me in 

the future, with our Navy. They are not going to do that. Our Navy 

20

is too strong. What they are going to do is that they are going to 

come at us with asymmetric methods. 

Our asymmetric advantage is our people. Our advantage is the 

ability to bring the genius of the American citizen, sons and daughters of America, to the task. And I have case after case that shows 

that the system that I have today is preventing me from executing 

my Title 10 responsibility to provide, organize, train, and equip in 

the most efficient manner and to produce the fighting capability 

that I am being called upon to deliver for this Nation. 

So, Madam Chairman, that is why I have spoken everywhere I 

get a chance to speak to the requirement for us to transform this 

system, and I appreciate, Mr. Secretary, you giving me the chance 

to come and speak here today. Thank you. 

Secretary RUMSFELD. Madam Chairman, if I could just proceed, 

we find that it is currently taking us about 5 months to hire a new 

Federal worker and it takes 18 months to fire a Federal worker. 

Pay raises are based on longevity, not performance, in large measure. 

Over the past several months, we have worked with the Congress 

and tried to fashion language that would give us the needed flexibility. A portion of that proposal we made was approved by the 

House, as you mentioned. These proposals did not come out of midair. These are based on personnel management systems that Congress approved last year for Homeland Security and many years of 

experience with a number of successful congressionally authorized 

programs, including the China Lake program, which went back two 

decades. 

So a lot of the things that we are talking about here have been 

tested and proven out. The pilot programs, which now involve over 

30,000 DoD employees, tested many of those reforms, including pay 

banding systems, simplified job classifications, pay for performance, 

recruiting and staffing reforms, scholastic achievement appointments, and enhanced training and development opportunities. In 

each of those demonstration programs, when measured, employee 

satisfaction has been high and the employers are retaining more of 

their top performers. 

Our objective is to take those successful congressionally approved 

pilot programs and expand them throughout DoD so that more civil 

service employees can benefit from the increased opportunities that 

they have created, and so that their greater effectiveness can be 

applied across the Department. 

Let me also say, I have watched this debate and I know that 

there is resistance to this change, and Senator Sununu mentioned 

how tough change is, and it is hard. But there has been a good deal 

of misinformation circulating about these proposals, and let me put 

a couple of the myths to rest. 

Here is what the National Security Personnel System we are proposing will not do, contrary to what you may have read or heard. 

It will not remove whistleblowing protections. Those who report 

management, mismanagement, fraud, other abuses, will have the 

same protections that they have today. It will not eliminate or alter 

access of DoD employees to the Equal Opportunity complaint process. 

21

Nothing in this proposal affects the rights of DoD employees 

under our country’s civil rights laws. I was in Congress in the 

1960’s. I voted for all the civil rights legislation and I can tell you 

that is a red herring. 

Notwithstanding the allegations to the contrary, these proposals 

will not remove prohibitions on nepotism or political favoritism, as 

has been charged. Those things will properly continue to be prohibited. It will not eliminate veterans’ preference. That also is a false 

charge. 

It will not end collective bargaining, as has been suggested. To 

the contrary, the right of defense employees to bargain collectively 

would be continued. What it would do is bring collective bargaining 

to the national level so that the Department could negotiate with 

national unions instead of dealing with more than 1,300 different 

union locals, a process that is inefficient. It simply is grossly inefficient. 

It will not give the Department a blank check to change the civil 

service system unilaterally. Like the system Congress approved for 

the Department of Homeland Security, before any changes are 

made to the civil service system, the employees’ unions must be 

consulted. The Office of Personnel Management is involved in design and any disagreements would have to be reported to Congress. 

What it would do would be to give the President a national security waiver that would allow him to give DoD flexibility to respond 

in the event our national security requires us to respond and act 

quickly. Congress has regularly approved such national security 

waivers and various laws involving defense and foreign policy matters, recognizing the need of the Commander in Chief to deal with 

unforseen threats and circumstances. 

The National Security Personnel System will not result in the 

loss of job opportunities for civil service employees. That is a 

charge that has been made. To the contrary, it is the current system that limits opportunities for DoD civilians by creating perverse 

incentives for managers to give civilian tasks to the military personnel and to give civilian tasks to contractors. We believe that the 

transforming initiatives we are proposing would most likely generate more opportunities for DoD civilians, not less. 

I can assure you, I do not want 300,000 or 320,000 men and 

women in uniform doing jobs that are not the responsibilities of 

uniformed personnel. We don’t. We want them doing military 

tasks, and that is why they joined the military in the first place. 

Members of the Committee, we need a performance-based promotion system for our civilian workforce. We need a system that 

rewards excellence, similar to the one Congress insisted on for the 

men and women in uniform. 

Congress has granted the Department of Defense the flexibility 

to manage the Nation’s largest workforce, the uniformed military 

personnel. It works. The results are there for all to see. They are 

disciplined, they are well trained, they are highly effective, they 

are successful, and I would add they are also a model of equal opportunity employment. We are simply asking that Congress extend 

the kinds of flexibilities they need to give us in managing the men 

and women in uniform, also to manage the civilians. 

22

As Paul Volcker put it yesterday when he supported our approach, he said we have an opportunity to make real and constructive change in the way the civil service is managed in the United 

States. If the Department of Defense is to stay prepared for security challenges in the 21st Century, we have to transform not just 

our defense strategies, not just our military capabilities, but we 

have to also transform the way we conduct our business. 

One thing we know from the recent conflicts in Afghanistan and 

Iraq. The enemy is watching us and they are going to school on us. 

They are studying how we were successfully attacked. They are 

studying how we responded and how we might be vulnerable again. 

And in doing so, they are developing new ways to harm our people, 

new ways that they can attack to kill innocent men, women, and 

children. And as was mentioned earlier, they are not burdened or 

struggling with massive bureaucratic red tape fashioned in the last 

century. 

What this means is that we need to work together to ensure that 

the Department has the flexibility to keep up with these new 

emerging threats. The lives of the men and women in uniform and, 

indeed, the American people depend on it. I hope that you will help 

us try to bring this Department into the 21st Century, and I thank 

you, Madam Chairman, for the opportunity to testify on this important national security issue. 

Chairman COLLINS. Thank you. General Myers. 

General MYERS. Thank you, Madam Chairman and Members of 

the Committee. I have just a short statement and I thank you for 

the opportunity to be able to be before you today and to reiterate 

Secretary Rumsfeld’s and Admiral Clark’s requests for your support of this important initiative. 

First, let me begin by focusing on our soldiers, sailors, airmen, 

Marines, Coast Guardsmen, and DoD civilians. As Senator Stevens 

said, our success in Operation Iraqi Freedom and the war on terrorism in general are really a testament to their dedication and 

their professionalism and I thank all of you for supporting all our 

efforts. 

With regard to transformation, we have got to transform if we 

are going to continue to be successful in the 21st Century. We must 

continue our emphasis on more agile forces, on improved command 

and control systems, on more precise combat power, on better integrated joint team from the planning through execution. 

But our vital civilian workforce must also be part of this transformation. My calculations show that of our active duty workforce, 

the folks that show up every day, excluding the reserve component, 

about 36 percent of that workforce are civilians. So they have got 

to transform, as well. We have got to transform that system so they 

are more agile and responsive in terms of hiring, in terms of the 

task management, the ability to assign different tasks, and, of 

course, in rewarding performance. 

As you heard from Vern Clark and the Secretary, taking care of 

our people, whether in uniform or not, is a responsibility we take 

very seriously, and we are obviously dedicated to the best practices 

that benefit the workforce as well as the Department of Defense. 

Clearly, fair, ethical treatment of employees, employee safeguards 

are essential to all that and are part of these proposals. 

23

As Vern Clark told you, the Joint Chiefs of Staff have been working on this issue with Secretary Rumsfeld and his staff now for 

many months and all services are just as concerned as the U.S. 

Navy, represented by Admiral Clark, and frankly, we need your 

help. As Vern said, we need your help to be able to do our job. 

As the Secretary said, we don’t know what the crisis or contingency is really going to look like. It will probably not look like the 

operation we just saw in Iraq. And so what we need is your support 

so we can be responsive to whatever challenge we face here in this 

21st Century, and we thank you for your support and your continued support. Thank you. 

Chairman COLLINS. Thank you, General Myers. 

Dr. Chu, do you have a statement? 

Mr. CHU. No, ma’am. I have nothing to add. 

Chairman COLLINS. Thank you. 

Secretary RUMSFELD. He has the answers to all the questions, 

Madam Chairman. [Laughter.] 

Chairman COLLINS. Mr. Secretary, many of us will direct them 

to you, but you do have the right to be able to ask others to answer. We now will turn to 6-minute rounds of questioning. 

Mr. Secretary, as you are well aware, just last year, the Congress 

granted to the Department of Homeland Security unprecedented 

authority to develop a modern, flexible personnel system for its 

170,000 employees. Now, many people have argued that it would 

make more sense to wait until that major undertaking were complete to learn from DHS’s experience before undertaking another 

wholesale revamping of the personnel system for hundreds of thousands of additional Federal workers. What is your response to that 

concern? 

Secretary RUMSFELD. I would make a couple of comments. My 

understanding is that the kinds of flexibilities we are requesting, 

some are very similar to the Department of Homeland Security. 

Others are things that have been granted to other departments and 

agencies previously. Indeed, there are a number of agencies that 

have a number of the flexibilities that we are requesting. 

I would also say that a number of the things that we are proposing date back as far as 20 years to the China Lake effort. In 

other words, Congress authorized the experiments and the pilot 

programs. We have done them. We have tested them. It is not as 

though these things are new, in many respects. 

I would also say that there is always a fair argument about 

changing anything, that is ‘‘Let us wait,’’ and my problem with it 

is that we have enormous challenges in the world and that we 

could look at the outcomes, and we know the outcomes are wrong. 

The outcomes are unhappy outcomes. The fact that we have got 

300,000-plus military people doing civilian jobs did not just happen. 

It happened because people looked at what they needed done and 

they went right to the military or they went right to contractors 

and they stayed away from the military service and they did it because they are rational, because they were being held accountable 

for performing important national security responsibilities and they 

made a judgment. They voted with their feet. They said, ‘‘I am 

going to do that.’’

24

I think the evidence is so overwhelming that the changes need 

to be made, my feeling is that while it would be nice to test any 

conceivable change, and I don’t disagree with that and I see the 

logic to it, I think that we are well past that point in our circumstance. 

Chairman COLLINS. Mr. Secretary, one of the major differences 

between our approaches concerns the appeals process for employees. Now, I agree with you that the current system is too slow, it 

is too complicated, and it is too inflexible, but in designing a new 

system, we need to ensure that it is not only fair, but that it is perceived as fair by Federal employees. That means that there has to 

be adequate due process and there has to be an independent decision maker, in my view. 

The Department has proposed doing away with the role of the 

Merit Systems Protection Board altogether and instead coming up 

with an appeals process that would be internal to DoD. If the Department essentially sets up an appeals process whereby Department employees will be judging the action of the Department’s own 

supervisors, my concern is, will you be able to assure employees 

that the decisions that are rendered are fair and impartial? If there 

is no appeal of adverse decisions to an outside, independent entity, 

other than going to Federal Court with all the problems that entails, how will your employees be assured of a truly independent 

and unbiased review and decision? 

Secretary RUMSFELD. I would like to ask Dr. Chu to answer that 

question, and it is because I am plucky, but I am not stupid. I 

know this is a very complicated area and I agree completely with 

you that it is important that any process be seen as fair if you are 

going to be able to attract and retain the people you need. You 

have to have that element of perceived fairness. My reading of the 

process that Dr. Chu has proposed here and that we are proposing 

is that it would have that perception of fairness. 

Do you want to comment on it, Mr. Chu? 

Chairman COLLINS. Dr. Chu. 

Mr. CHU. I would be delighted to. First, let me emphasize that 

our proposal envisages working with the Merit Systems Protection 

Board in designing an alternative appeals process under the construct that we have advanced. 

Second, I want to emphasize that we are not the only critics of 

the appeal process. There is a very good GAO report, testimony 

from 1996 to the Congress on this issue, and it says, ‘‘Its protracted 

processes and requirements,’’ referring to the appeals process, ‘‘divert managers from more productive activities and inhibit some of 

them from taking legitimate actions in response to performance or 

conduct problems.’’

And that is, indeed, our experience. We have a nice list of—unfortunately, I should emphasize—a list of cases where employees, 

in our judgment, misbehaved very substantially—sexual harassment, or trying to run over your supervisor with your own vehicle. 

The Department’s sanction, as would be in the military, would be 

to fire the individual. The appeal to the external review party, in 

this case the Merit Systems Protection Board, led to substantial 

downgrading to only suspension, and I think you have too much diVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
25

1The information from Mr. Chu appears in the Appendix on page 156. 

vergence in the current system between the immediacy of the facts 

that we confront and the remoteness of the appeal authority. 

The use of the internal appeal process—we would have an appeal 

process if Congress would grant us the authority we are seeking in 

this statute, but it would be internal to the Department of Defense. 

I think there is ample precedent to demonstrate the Department 

can handle that in a responsible fashion. That is true of military 

crimes already, the Court of Military Appeals inside the Department of Defense. It is true of contract disputes with the Board of 

Contract Appeals. 

So I think there is plenty of history, evidence, structure, and 

analogy within the Department that would allow an internal process to be more expeditious and, I think, more fair ultimately to all 

the employees who do perform well, who do exemplify high standards of behavior. They don’t want, in my judgment, and I think 

survey evidence supports this, they don’t want the rotten apples in 

their midst, either, and they resent it when the outcome is a slap 

on the wrist for what everyone sees as a horrendous offense. 

Chairman COLLINS. My time has expired, but let me just make 

one quick point. One of the key differences between our two proposals is you would eliminate the role of the Merit Systems Protection Board altogether other than having a consulting role as you 

are setting up your new internal appeals process. We would change 

the role of the Merit Systems Protection Board by changing it to 

an appellate body. It would no longer do a de novo review of the 

case. So you could solve a lot of the timeliness problems, a lot of 

the cumbersome, complicated process, but you would still have the 

ability for an employee to appeal an adverse decision outside of the 

Department, and I think that is an important protection. 

Senator Levin. 

Senator LEVIN. Thank you, Madam Chairman. 

Mr. Secretary, you have stated that the Department currently 

has 300,000 positions occupied by military personnel that could be 

performed by civilians. Has the Department made a formal study 

to lead you to that conclusion? Where does that number come from? 

Secretary RUMSFELD. From Dr. Chu. [Laughter.] 

Mr. CHU. It comes originally from the Task Force on Defense Reform that the previous administration constituted. We maintain a 

series of inventories of government, of all our positions against this 

issue of what is inherently governmental, what can be considered 

commercial activity, etc. 

Senator LEVIN. Can you give us that inventory, share that with 

the Committee? 

Mr. CHU. We will be delighted to provide that information.1

Senator LEVIN. And that inventory totals 320,000? 

Mr. CHU. Our conclusion is there are as many as 320,000 military positions that could conceivably be performed by civilian personnel, yes, sir. 

Senator LEVIN. My question, though, is does the inventory that 

you referred to total 320,000? 

Mr. CHU. There are several inventories, to be precise about 

this——

26

1The information provided by Mr. Rumsfeld appears in the Appendix on page 157. 

Senator LEVIN. Does any inventory total 320,000? 

Mr. CHU. The short answer is yes, sir. 

Senator LEVIN. Thank you. One of the most important rules that 

precludes the—and if you will get us all the inventories, I would 

appreciate it. 

One of the most important rules that precludes the Department 

of Defense from hiring civilian employees to perform new functions 

is the limit on the number of civilian employees, the so-called fulltime equivalent or FTE ceiling that is imposed by OMB. I am wondering whether the administration has any plan to eliminate that 

FTE ceiling, Mr. Secretary. 

Mr. CHU. If I may, sir, this is one of the many red herrings the 

Secretary has referred to. I have signed more than one memorandum within the Department emphasizing, as Congress has directed, we are not to manage by FTEs. We manage by money as 

far as civilians are concerned. 

So I don’t want to be naive about this. There is a large culture 

out there that in terms of convenience in management still thinks 

about itself in terms of FTEs, but we are trying to get the Department off this outdated concept. 

Senator LEVIN. Is there an FTE ceiling imposed by OMB? 

Mr. CHU. Not that I am aware of. 

Senator LEVIN. Next, Mr. Secretary, you have referred to the 

high percentage of civilians in the Iraq theater who are contractors. 

Many of these civilians are performing short-term surge-type functions——

Secretary RUMSFELD. That is true. 

Senator LEVIN [continuing]. Such as responding to oil well problems, rebuilding bridges, port facilities, and the like. Are you suggesting that the Department of Defense should hire civilian employees on a short-term basis to perform functions like those? 

Secretary RUMSFELD. No, I am really not. You are quite right. 

The number of civilians in the theater are involved in a full spectrum of activities, some of which are undoubtedly not appropriate 

for permanent employees. On the other hand, the 83 percent to 17 

percent seemed to me like a disproportionately large number. 

Senator LEVIN. Well, it might be useful if you could——

Secretary RUMSFELD. What it ought to be, I don’t know, and no 

one would know. You would have to go down and try to look at all 

those functions and disaggregate it, but——

Senator LEVIN. Well, you might give us an estimate and 

disaggregate it, because when you use that testimony, that 83 percent of the civilians deployed in the theater are contractors, you are 

suggesting that a significant percentage of those civilians should be 

Department of Defense civilian employees instead and it would be 

interesting if you could have somebody just give us an estimate as 

to what part of the 83 percent you believe, if the rules were different, would be Department of Defense civilian employees, for the 

record, if you could supply that.1

Secretary RUMSFELD. I will try. 

Senator LEVIN. Well, you have given the testimony——

Secretary RUMSFELD. Right. 

27

Senator LEVIN [continuing]. And it seems to me you ought to 

back it up with some kind of an estimate. 

Secretary RUMSFELD. We will try to take the total and see if we 

can’t come up with some number that might logically fit. I would, 

for example, cite things like linguists might be people that would 

be internal as opposed to external——

Senator LEVIN. You have tried to hire——

Secretary RUMSFELD [continuing]. As opposed to someone putting 

out an oil well fire. That would be much more likely, obviously, to 

be a contractor, and I understand that. 

Senator LEVIN. That would be helpful, and to give us the groups, 

the types of employment and about how many are in each group. 

Dr. Chu, you have testified the Department needs authority to 

bargain with unions at the national level because it is impractical, 

and I think the Secretary also testified to this effect, to continue 

bargaining with 1,400 separate bargaining units. I think that more 

accurately is the Secretary’s testimony. 

The legislative proposal would specifically authorize bargaining 

at a national level. It seems to me that is one issue. That is one 

important point that you are making. But you are going way beyond that, because you are also authorizing, or would seek to authorize the total waiver of Chapter 71 of Title 5, and that is the 

part of the U.S. Code that addresses bargaining rights in general. 

Does the Department intend to modify provisions, if you were 

given this authority, regarding unfair labor practices and the duty 

to bargain in good faith, for instance? Is that your intention if we 

gave you the authority you seek to waive Chapter 71 of Title 5? 

Mr. CHU. We don’t intend to engage in unfair practices, no, sir. 

We do seek to——

Senator LEVIN. No. 

Mr. CHU. I am sorry. 

Senator LEVIN. That is not my question. 

Mr. CHU. I am sorry, sir. 

Senator LEVIN. The question is, do you intend to modify the provisions of Chapter 71 of Title 5 relative to unfair labor practices. 

Mr. CHU. We don’t have such an intent, sir. 

Senator LEVIN. Then my question——

Mr. CHU. I should emphasize, this is a power, the waiver of 

Chapter 71, already granted Homeland Security. 

Senator LEVIN. Now, my question is this. Why isn’t the authority 

to bargain at the national level sufficient, just that authority, given 

your argument about having to deal with 1,400 separate bargaining units? Why wouldn’t the authority to bargain at a national 

level be sufficient? Why do you need the authority to waive the requirements of Chapter 71 in their entirety given your immediate 

statement that you have no intent to exercise that waiver? 

Mr. CHU. Because you have to get the bargaining to come to a 

conclusion, sir. Our experience is, many bargaining efforts don’t 

come to a conclusion. I would cite an Air Force installation which 

is still bargaining since 1990 over the issue of——

Senator LEVIN. That is the authority to bargain at a national 

level. 

Mr. CHU. The bargaining process needs to have a conclusion for 

it. 

28

Senator LEVIN. We agree obviously on that. But is the waiver of 

those other protections in Chapter 71 necessary to get bargaining 

to a conclusion? 

Mr. CHU. We think so, sir. I would point out that the spirit of 

that is in the provisions that apply to a large list of other agencies—the General Accounting Office, the FBI, the CIA, the National Security Agency, TVA, and the Federal Labor Relations Authority itself. So this is not an unprecedented proposal. 

Senator LEVIN. That is not my question, but thanks anyway. 

Chairman COLLINS. Thank you, Senator Levin. 

Dr. Chu, before I call on Senator Voinovich, I would point out, 

following up on Senator Levin’s point, that we put within the bill 

a deadline for how long disputes can be before any one component 

of the FLRA and we put a 180-day limit so that issues would come 

to conclusion. They would not hang on for years and years, as occasionally cases do now. So I think there are other ways to ensure 

that bargaining comes to a conclusion than having the authority to 

waive the entire chapter governing collective bargaining. 

Senator Voinovich. 

Senator VOINOVICH. First of all, I would like to make a comment 

before I ask a question, and that is that I think everyone should 

understand your proposal, Mr. Secretary, didn’t happen overnight. 

Dr. Chu and I talked about flexibility for the Department of Defense over a year and a half ago when we were up at Harvard at 

one of our executive sessions, so I think that is important. 

It was also mentioned that it takes 5 months to hire someone, 

Admiral, and I had hearings and brought in some college students 

in Dayton to gauge whether they were interested in going to work 

for the Federal Government. I will never forget that the military 

person that was there said to one of the young men, we want to 

hire you. You are just what we need. We have this work-study program. And the kid’s face was just this big smile. And I asked the 

military person, how long will it take for him to find out whether 

he is hired? Six months. 

Now, that really doesn’t have to do, I don’t think, with this legislation. I think that deals with streamlining the process in terms of 

hiring that could be done. I am not sure you need legislation in 

order to take care of a 5-month delay. It seems to me that could 

be handled through more efficient internal management systems. 

My question, Mr. Secretary, is related to the proposed National 

Security Personnel System, which would waive significant portions 

of Title 5. My staff has attended several briefings over the past few 

months in which the Department has offered its rationale for these 

flexibilities. In some cases, it seems that DoD has requested waivers, as mentioned by Senator Levin and our Chairman, that are 

significantly broader than necessary to make the desired reforms 

to its personnel system. 

For example, the NSPS would include consultation with OPM. 

However, it would allow the Secretary to break a tie when there 

is a disagreement between DoD and OPM. The bill that Senator 

Levin and the Chairman have introduced would retain OPM’s oversight role as an equal partner instead of granting the Secretary, 

‘‘sole and exclusive authority to make personnel decisions.’’

29

Title 5 was waived for the Transportation Security Agency, and 

I must tell you, it has not been as successful as intended in the 

personnel area. In fact, there is probably going to be, in the next 

day or so, a disclosure that some of the people that were hired were 

on the FBI’s ‘‘do not hire’’ list. So I am concerned about putting 

OPM aside in terms of their traditional role that they played with 

Federal agencies. 

Another concern deals with Senator Levin’s comments, and that 

is the issue of your request for authority to bargain collectively at 

the national level. That seems to make a great deal of sense. But 

at the same time you want this extraordinary new power, you seek 

to opt out of Chapter 71. Our bill would provide that you would remain in Chapter 71, as explained by our Chairman. 

So I would like you to explain some more about the Department’s 

thinking behind these proposed waivers. Why remove DoD completely from OPM oversight and change the relationship between 

the Defense Department and OPM as it has not been changed for 

most of the other agencies in the Federal Government? And second 

of all, if you get this broad authority to bargain collectively, and 

that is a big deal, why not preserve the other labor-management 

rights under Chapter 71? 

Mr. CHU. Sir, to this issue of the OPM role, I think we, in the 

legislation, tabled and that was further, on this point strengthened 

by the House mark, we proposed that the regulations would be 

jointly developed. What we did add, as you indicated, sir, is a national security waiver, as the Secretary testified, that would say, 

if it is a national security issue, the Secretary reached the conclusion that it is not going to work for this Department. He may take 

a different course than might be true from other cabinet departments. It is subject to the President’s ultimate decision in the way 

the House has worded that language. 

Second—so we look forward to partnership with OPM. In fact, we 

have used OPM’s excellent studies in the last several years as our 

guide to how we should be designing the structure of this system. 

In terms of Chapter 71, what I would reiterate, sir, that is the 

step that Congress already took with the Homeland Security Department. That statute does waive Chapter 71. We are merely 

being more explicit, I think, than that statute is as to what we intend to do with that authority. That is to say, we would like, broad 

cross-cutting human resource issues, to move to national bargaining as opposed to local bargaining. It is too slow, too cumbersome, doesn’t get to a consistent result for the Department in 

a timely fashion. 

Let me come back, if I may just a minute, to the OPM role. The 

Congress has already given this Department in certain targeted 

areas authority outside of strict joint development. The laboratory 

community is an example of that authority. The Senate’s recent decision in the armed services bill on expanding the Acquisition 

Workforce Demonstration Project has some of the same flavor to it. 

We think it would be in partnership with OPM under these 

kinds of broader authorities, but we do think it is important, and 

I think the Congress has agreed over the years with that principle, 

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tional security is involved and that difference needs to be respected. 

Senator VOINOVICH. What it really boils down to, though, is that 

you would remove an enormous number of people from OPM oversight. We will wake up one day and God only knows what we will 

have all over the Federal system, and I think that there needs to 

be some consistency across the board and it seems that there is a 

difference of opinion on this issue. I think that somebody also 

ought to be looking at the big picture, particularly if you are given 

all of the other flexibilities that you are asking for in your proposed 

legislation. 

Secretary RUMSFELD. Senator, if you think about it, the Department of Defense is in 91 countries in various ways. We are in every 

time zone. We have working conditions often that are harsh and 

dangerous. We have a circumstance that is, I think, notably different than other departments and agencies. And yet for the most 

part, what Dr. Chu has been testifying to is a reflection of, for the 

most part, authorities and flexibilities that, possibly not in total 

but in part, have been given to a variety of other departments and 

agencies for some time, a set of flexibilities which have been tested 

in the Department of Defense under authorizations by Congress for 

many years. 

I think that it is—you are right, it does involve a lot of people 

because the Department of Defense is a big Department, but it also 

goes to the kinds of things that Admiral Clark and General Myers 

are talking about, that we do have a responsibility for national security and that they are having trouble managing to meet those responsibilities in a way that is appropriate and that the Congress, 

with its oversight responsibilities, would want to know that they 

could do so that they could hold people accountable for their performance. 

Senator VOINOVICH. It seems to me, though, that among those 

widely varied categories of employees, you might restrict it to those 

categories of employees who are the kind of people that you are 

talking to and not the vast number of people that are working in 

the Department in a lot of jobs, for example, in the State of Ohio 

at DFAS and some of the other facilities that we have and maybe 

distinguish between them. It is the same thing with the issue of 

performance evaluation and pay for performance. I have been 

through this. This is tough stuff. 

Secretary RUMSFELD. It is. 

Senator VOINOVICH. And if you don’t have the people that have 

the training and the skills to get the job done, it can be a big disaster, and it seems to me if you are going to get started on something like that, you would cascade it by designating certain areas 

where you are going to initiate reforms, but not just in one fell 

swoop go forward and start the system. 

Secretary RUMSFELD. Let me make two comments. One is, we 

kind of have done what you are suggesting over a period of time 

by these pilot programs which have involved tens of thousands of 

people. And second, one of the complaints I hear from managers is 

that they have to manage to a variety of different personnel systems. Is this something you want to comment on? 

31

Mr. CHU. Yes, sir. We have units where there are fewer than 100 

employees under a single overall supervisor, which operate under 

as many as five or so different personnel systems. At that level, it 

is a nightmare for the supervisor. You have employees who are 

working side by side, who are governed by different rules as to how 

you can reward them, how you discipline them, how you counsel 

them, what you must do to advance their careers. We need a cohesive system for the Department as a whole, very much, I think, as 

General Myers and Admiral Clark have testified. It is all part of 

the same——

Senator VOINOVICH. We have no problem with that. It is the 

same thing we are trying to do in the Homeland Security Department, that is, to try and have a system that is understandable and 

consistent across the board. So we have no problem with that. 

There are just some of these things that cause concern in terms of 

how far do you go and how fast do you go in an enormous undertaking that you are making. We are trying to be helpful, not harmful, to what you are trying to accomplish. 

Chairman COLLINS. Thank you. Senator Akaka. 

Senator AKAKA. Thank you very much, Madam Chairman. 

Secretary Rumsfeld, you are seeking to waive Chapter 53 of Title 

5 which governs the Federal wage system that pays Federal blue 

collar employees. DoD employs over half of the government’s blue 

collar workers and nearly half of those employees are veterans. As 

DoD moves to a pay-for-performance system from the GS-based 

system, which includes guaranteed annual pay increases, my question is, what happens to the cap on blue collar pay? 

Mr. CHU. We are seeking, sir—you are accurately summarizing 

our preferences. We are seeking to bring essentially the entire Department under a pay banding system. That is why we are seeking 

to waive those parts of Chapter 53 that would otherwise restrain 

the inclusion of blue collar employees in such a system. 

We do, of course, set blue collar wages based upon wage surveys, 

and that would continue to be the practice that we would use in 

the future. I think we have precedent here in how we handle our 

non-appropriated fund employees. I don’t think there should be a 

big issue here. 

Senator AKAKA. Let me ask another part to that. If you decide 

to retain the Federal wage system for the Department’s blue collar 

workers, will you abide by the Monroney amendment which Congress specifically required the Department to follow in 2001? The 

Monroney amendment requires that when the government had a 

dominant industry in a particular area, the private sector wage 

data had to come from the same industry. So my question is, would 

you abide by that amendment? 

Mr. CHU. We will abide by whatever law the Congress enacts, 

yes, sir. 

Senator AKAKA. The Department wants to waive Chapter 77 of 

Title 5 relating to employee appeals. Such a waiver would eliminate employee access to the Merit Systems Protection Board. What 

are the specific problems DoD has encountered with the MSPB? 

Mr. CHU. Let me, in fact, if I may, use my props, sir. I think you 

can see the problem with MSPB by the thickness of the manual 

that guides—it is the purple volume I am holding in my hand—

32

that guides MSPB decisionmaking, and that is not a set of histories 

and individual cases. This is the principles MSPB is supposed to 

follow. 

I think there are two central problems with the current process. 

One is, it takes far too long to come to resolution. Second, in too 

many cases where there has been, at least in our judgment, serious 

employee misconduct, and I don’t mean just minor spats and differences, this is sexual discrimination, this is a supervisor who 

backed a woman into a closet and made what we thought were improper advances. The MSPB decision was, in the words of the Administrative Law Judge, that it was simply romantic expressions 

by the supervisor and our efforts to have the employee terminated 

were, in fact, reduced to a suspension. 

So I think there is a failure, frankly, to deal with the realities 

in the same way that we need in a cohesive force to deal with people who misbehave, the same cohesive force to which Admiral 

Clark spoke. It undercuts discipline in the system as a whole. It 

leads, in my judgment, to severe morale problems for the other employees of the agency who see the bad apples, see us try to take 

action on these people and fail. Worse, it leads supervisors to give 

up, to feel, just as Senator Coleman indicated, that it ain’t going 

to make any difference. Why should I bother to try? And that leads 

ultimately to what Admiral Clark and General Myers cannot stand, 

and that is a denigrated level of performance. 

Admiral CLARK. May I give an example, Senator? 

Senator AKAKA. Absolutely. 

Admiral CLARK. January 2003, we had an employee, a GS middle 

grade employee who had been under performance review and observation for a number of months and the employee was terminated. The removal notice cited the unsatisfactory performance. 

The Merit Systems Protection Board judge discounted this performance assessment in the judgment, and the judge made the decision 

that because in a period of time the employee had been injured, 

that the observations and the documented performance that was 

required by law and that had been done for months and months 

discounted it, and then went on to cite the age of the individual 

and the years of service which are specifically not to be considered 

in performance cases. Now, this is January. This is what happens. 

And so then what happens to, just as Dr. Chu has said, the supervisor has now worked months with an employee who we have 

been having difficulty with. He has spent months in the process 

and the judgment is made, and at the end of the day, I commented 

when I was with Secretary Rumsfeld over here on the Hill talking 

about this subject, and I made this comment. This is not about us 

standing up and asking for some system that doesn’t hold us accountable. The U.S. military, at the heart of everything that we believe in is accountability. If we don’t do something right, hold us 

accountable. But give us a chance to manage this workforce in a 

way that then allows us to maintain the morale of the workforce. 

The vast majority of this workforce that are heroes, that are 

helping us produce the military capability that will then give the 

President of the United States of America options when we have 

to go on and prosecute this global war on terrorism. 

33

1The information provided by Admiral Clark appears in the Appendix on page 158. 

2The letter sent to Senator Akaka from the Senior Executives Association appears in the Appendix on page 134. 

Senator AKAKA. Thank you for that response. Could you get back 

to us on what MSPB case law or regulations impact DoD the most? 

Can you provide that? 

Admiral CLARK. Absolutely. I would be happy to.1

Senator AKAKA. Madam Chairman, my time has expired, but I 

would like to make a brief statement. There are those who say that 

the MSPB process takes too long. However, nearly 80 percent of 

cases at the MSPB are resolved within 90 days. This is better than 

the EEOC or the NLRB. 

According to the Senior Executives Association, there is no 

known government judicial or administrative operation that issues 

initial decisions faster than the MSPB. Madam Chairman, I ask 

unanimous consent to include in the record a letter from the Senior 

Executives Association in support of MSPB appeal rights.2

Chairman COLLINS. Without objection. 

Senator Akaka, you brought up a very good point and I want to 

clarify for our panel once again that the bipartisan bill that we 

have introduced specifically allows DoD to disregard the Merit Systems Protection Board case law that you have cited today as troubling, and I would encourage you again to take a look at the provisions in our bill because I think they specifically deal with the 

issue that you have raised. 

Senator Fitzgerald. 

Senator FITZGERALD. Thank you, Madam Chairman. 

Dr. Chu, I was very interested in your testimony about the process you have had to go through to get the right to garnish, or 

maybe it was Secretary Rumsfeld, who mentioned trying to garnish 

wages of DoD employees who had actually, in effect, stolen money 

by using their credit cards perhaps for personal use or some other 

impermissible use. Dr. Chu, you said you had to negotiate separately with how many different locals, 1,300? 

Mr. CHU. We have, if you include the non-appropriated fund 

locals, we have, I believe, 1,366 locals in the Department of Defense. 

Senator FITZGERALD. Thirteen-hundred? 

Mr. CHU. Thirteen-hundred-and-sixty-six. 

Senator FITZGERALD. Thirteen-hundred-and-sixty-six, and you 

have been undertaking that for how long? 

Mr. CHU. The travel card negotiations which the Secretary was 

referring to have been going on for the better part of 2 years. It 

may even have started in the last administration. I would have to 

check. 

Senator FITZGERALD. During that time, I seem to recall several 

Congressional hearings where DoD was called before and beaten up 

about the misuse of credit cards. But, in fact, your inability to address that problem perhaps stems from the laws that are on the 

books. So you are getting beaten up by us on the one hand, and 

on the other hand, we are hampering your efforts to solve that 

problem. 

You are probably, incidentally, the only employer in the country 

that wouldn’t have the right to offset money that the employee 

34

owed. I think employers have a common law right of offset in a 

case like that. 

Now, Senator Levin was asking questions that indicated that he 

perhaps doesn’t have any objection to DoD having the right to bargain nationally on national issues, and I understand Senator Collins’ bill would allow national bargaining except if there is a case 

with a specific local. And, in fact, if there is more than one local 

involved, then they could bargain nationally. 

But Senator Levin was raising objections to your request to 

waive Chapter 71 of the Labor Management Relations Act. I had 

my staff get me a copy of this law, and it looks like it was passed 

in 1978, does that sound right? That would be during the Carter 

Administration. I noted that right at the outset, it starts out by exempting the GAO, the FBI, the Central Intelligence Agency, and 

the National Security Agency. Then, as you pointed out, the TVA 

and the Federal Labor Relations Authority itself are exempted, and 

the Federal Service Impasses Panel, and the Central Imagery Office are all exempted. It seems like everybody who has a national 

security function is exempted from this requirement except the 

DoD. 

Aren’t you really just trying to get the flexibility that other agencies that are involved in protecting this country have? 

Mr. CHU. Absolutely, sir. 

Senator FITZGERALD. To me, it seems appropriate that they have 

that flexibility. I think the one indisputably legitimate function, the 

most important function of our Federal Government is to provide 

for the common defense, and I would like to see them have that 

authority. 

I know this isn’t the subject per se of the legislation you are proposing, but I noticed that Secretary Rumsfeld wrote an op-ed in the 

Washington Post a week or so ago that referenced 800 reports that 

the DoD has to submit annually to Congress. That number caught 

my attention because I don’t recall ever reading one of those. I 

don’t know if those reports are sent to my mail room. I am not even 

aware if any of my staff members are reading those. I imagine 

those requirements go back a long way in the law. How many people do you have to put——

Secretary RUMSFELD. Think of how many trees we have to kill 

just to make the paper. 

Senator FITZGERALD. Enormous. 

Secretary RUMSFELD. Yes. I mean, it is, and what happens is frequently there will be a—just for the sake of argument, let us assume that the Pentagon does something wrong 20 years ago, wrong 

meaning people in Congress didn’t agree with it. An amendment is 

proposed and the Pentagon resists the amendment, saying that 

that is too burdensome, and they say, all right, submit a report 

every year and tell us, assure us that you are not doing something 

that we feel you shouldn’t have been doing. It is a perfectly legitimate beginning of this process. 

And then what happens is it goes on and on and it goes for 10 

or 15 years. There is no sunshine—no sunset rule, I should say on 

it. Our hope is that people will take a look at these things and say, 

fair enough. Let us discontinue half or three-quarters of these reports. 

35

I notice you read off a list of agencies that do not have a requirement for third-party intervention. I noticed that on the list also 

were the Botanical Gardens, the Office of Architect of the Capitol—

a whole bunch of agencies are exempted from this. It goes on, Administrative Office of the U.S. Courts. It is a list of—I don’t know 

how long it is. 

Senator FITZGERALD. Not to mention our own Senate offices. 

Mr. CHU. We won’t go there. [Laughter.] 

Senator FITZGERALD. I would like to help you address the huge 

number of reports that you have to file. Some of these could go way 

back. They could go back to the Korean War, the Vietnam War, 

something that happened at that time that should have been addressed but the circumstances have long since changed, perhaps, to 

obviate the need for that report. I see no reason not to add it in 

whatever bill this Committee works out, even though it is on a 

slightly different issue. We have to start the ball rolling to give you 

the flexibility to meet your needs. 

I congratulate you on undertaking this task, Secretary Rumsfeld. 

We are lucky to have someone of your caliber who is not willing 

to put up with the kind of nonsense you have to put up with in 

Washington to manage a Department of your size. It is a great 

challenge, and we thank you for doing what you are doing and contributing your services here. Thank you. 

Secretary RUMSFELD. Thank you very much. 

Chairman COLLINS. I want to thank our panel for being with us 

this morning. Your presence here is testimony to how important 

this issue is to the Department and we appreciate your testimony 

and your insights. We will be working further in the hope of coming up with a bipartisan plan that we will either move as a separate bill or take up in the DoD conference, which Senator Levin, 

Senator Akaka, and several of us fortunately serve on both committees. So thank you very much for your testimony this morning. 

Secretary RUMSFELD. Thank you very much, Madam Chairman. 

Chairman COLLINS. I should note Senator Pryor is also a Member of both committees, too. Thank you. 

I am pleased to welcome our next witness, who is U.S. Comptroller General David Walker. As Comptroller General, Mr. Walker 

is the Nation’s chief accountability officer and the head of the U.S. 

General Accounting Office. 

I want to note that Mr. Walker made a special effort to be here 

today. He was previously scheduled to be in California, I believe it 

was, and I very much appreciate his rearranging his schedule. 

I also want to extend my personal apologies to Senator Pryor for 

letting our panel go before he had a chance to question. I very 

much apologize and we will call on you first for Mr. Walker. Thank 

you. 

Mr. Walker, you may proceed with your statement. 

36

1The prepared statement of Mr. Walker appears in the Appendix on page 60. 

TESTIMONY OF HON. DAVID M. WALKER,1 COMPTROLLER 

GENERAL, U.S. GENERAL ACCOUNTING OFFICE 

Mr. WALKER. Thank you, Madam Chairman. It is a pleasure to 

be here, Senator Voinovich, other Senators. I might note for the 

record that I came back on the red eye last night, so hopefully I 

will arrive this morning and I won’t fall asleep during my own testimony. 

I also would like to note for the record that our son, Andy, who 

is a Marine Corps company commander, came back from Iraq on 

Sunday night, so we are pleased to have him back and very proud 

of what he and his colleagues were able to accomplish in Iraq. 

I am pleased to be here today to discuss legislative proposals to 

help the Department of Defense address its current and emerging 

human capital challenges. We strongly support the need for government transformation and the concept of modernizing Federal 

human capital policies, both within DoD and the Federal Government at large. As I have said on many occasions, human capital 

reform will be a key element of any government transformation effort. 

The Federal employee system is clearly broken in a number of 

critical respects, designed for a time and workforce of an earlier era 

and not able to meet the needs and challenges of our current, rapidly changing, and knowledge-based environment. The human capital authorities being considered for DoD have far-reaching implications for the way DoD is managed, as well as significant precedentsetting implications for the Federal Government at large and OPM 

in particular. 

We are fast approaching the point in time where standard government-wide human capital policies and procedures are neither 

standard nor government-wide. In this environment, we believe 

that the Congress should pursue government-wide reforms and 

flexibilities that can be used by many government agencies, including DoD, subject to those agencies having appropriate infrastructures in place before such authorities are operationalized. 

Considering certain proposed DoD reforms in the context of the 

need for government-wide reform could serve to accelerate progress 

across the government while at the same point in time incorporating appropriate safeguards to maximize the chances of ultimate success and minimize the potential abuse and prevent a further fragmentation of the civil service. 

More directly, agency-specific human capital reforms should be 

enacted to the extent that problems being addressed and solutions 

offered are specific to a particular agency, such as military personnel for DoD. Several of the proposed DoD reforms clearly meet 

this test. Importantly, relevant sections of the House of Representatives version of the National Defense Authorization Act for fiscal 

year 2004 and the National Security Personnel System Act cosponsored by Chairman Collins, Senator Levin, Senator Voinovich, and 

Senator Sununu, in our view, contain a number of important improvements over the initial DoD legislative proposal. 

Moving forward, as I mentioned previously, we believe it would 

be preferable to employ a government-wide approach to address seVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00040 Fmt 6633 Sfmt 6601 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
37

lected human capital issues and the need for certain flexibilities 

that have broad-based application throughout the Federal Government. We believe that a number of the reforms that DoD is proposing fall into this category, such as broad banding, pay for performance, reemployment rights, pension offset provisions. In these 

situations, we believe it would be both prudent and preferable for 

Congress to provide such authorities government-wide, if possible, 

and to ensure that appropriate safeguards are in place before they 

are operationalized by the respective agencies. 

We also believe, in summary, Madam Chairman, that since we 

designated strategic human capital management as a high-risk 

area on a government-wide basis in January 2001, the Congress, 

the administration, and the agencies have taken steps to address 

the Federal human capital shortfall and we have more progress in 

the last 2 years than the last 20, and I am confident with your 

dedicated efforts we will have more in the next two years than the 

past two years. 

I have made a number of statements over this past 2 years in 

order to help facilitate transformation, and Senator Voinovich 

clearly has been on the point and has dedicated a lot of his time 

and effort as a U.S. Senator to this, and I know, Madam Chairman, 

you have been very actively involved, as well, and I appreciate 

that. But I think it is important to note that we believe that DoD 

and other Federal agencies clearly need additional flexibility in the 

area of human capital. At the same time, appropriate safeguards 

need to be incorporated in order to maximize the chance for success 

and minimize the possibility for abuse. I am pleased to say that the 

National Security Personnel System Act incorporates many of these 

needed safeguards and is a significant improvement over what the 

DoD initially proposed. 

At the same time, we hope that if Congress does act on this legislation this year, and obviously conference is going to be key with 

regard to this matter, we hope that Congress will seriously consider not only addressing DoD-specific needs, but also potentially 

providing additional flexibilities to not only DoD but other Federal 

agencies in an area where there is not only a need, but an application much beyond DoD. 

By employing this approach, we believe that you can accelerate 

needed human capital reform throughout the Federal Government 

while helping to assure that appropriate protections are in place to 

prevent abuse of civil servants. You would help to provide a level 

playing field within the Federal Government in the critical war for 

talent while helping to avoid the further Balkanization of the Executive Branch civil service system, which was championed by Teddy 

Roosevelt over 100 years ago. 

Thank you, Madam Chairman, and I would be happy to answer 

any questions you might have. 

Chairman COLLINS. Thank you very much for your excellent testimony. 

Mr. Walker, you raise a question that I have been thinking about 

throughout this hearing this morning, and that is should Federal 

employees have different rights depending on for whom they are 

working? Are we risking creating personnel systems that impede 

the transfer of employees from department to department, that 

38

mean that you get paid better if you work for the Department of 

Homeland Security or the Department of Defense than if you work 

at the Department of Agriculture or the Department of Education, 

that give you different appeal rights if you are subject to a personnel action depending on where you work? Are those issues that 

we need to take a look at, and does that trouble you that where 

you work would determine what your rights are as a Federal employee? 

Mr. WALKER. Well, I think there are certain things that, clearly, 

it shouldn’t matter where you work. You need to have substantive 

protections. There need to be independent appeal rights beyond the 

individual agency. 

I might note the two examples that were mentioned by the prior 

panelists, one being the court system and the GAO, the reason that 

they are separate is because they are involved in separate branches 

of the government under the Constitution. There are independence 

issues associated with that and there are good reasons why they 

have separate systems. 

I might also note that the GAO has something called the Personnel Appeals Board, which is an independent body that our employees have the authority to go to in lieu of the Federal courts if 

they so desire, but they still have the avenue to go to the Federal 

courts should they choose to do so. 

I also would commend your bill because I believe that by incorporating a number of critical safeguards dealing with performance 

management, dealing with special hiring authority and certain 

other areas, those concepts should be applied throughout the Federal Government. There are certain things that should have no 

boundaries, and I think pursuing that type of principle-based approach that includes incorporating certain safeguards is the right 

way forward. 

Chairman COLLINS. Could you share with us more about the 

GAO’s own experience in moving toward a more flexible personnel 

system, because you have really led the way and I want to commend you for your leadership. 

Mr. WALKER. Thank you. As you know, Congress has given us 

some flexibilities in the past and we also are going to be requesting 

additional ones in the near future. 

As far as the past, in 1980, Congress gave us our own personnel 

act. It exempted us from portions of Title 5 but not all of Title 5. 

The biggest thing that we did with that initial authority back in 

1980 were two things. First, we implemented broad banding, which 

is a more flexible classification system that provides for a more 

flexible pay system. It also allows us to implement pay for performance, additional pay for performance than otherwise might be the 

case in the typical GS system. We also had the authority to hire 

a certain number of critical individuals for up to 3 years on a noncompetitive basis on the CG’s authority. Those two things have 

been very helpful. 

In the year 2000, Congress gave us the ability to have early-out 

and buy-out authority to realign the agency rather than to 

downsize the agency, to create senior level positions equal to the 

Senior Executive Service, but for technical and scientific individuals, so we could progress those people up compensation-wise and 

39

responsibility-wise without—while recognizing that they are not 

the type of individuals that the Senior Executive Service was envisioned for. And, you also gave us authority to modify our reduction 

in force rules whereby we did not reduce veterans’ preference and 

we were able to consider performance more than length of service, 

but we still had to consider length of service. 

We are going to be asking for some new reforms in the near future, by the end of June, that will come before this Committee and 

I hope can be considered this year. 

I will say this. When you are talking about making the type of 

changes that the Department of Defense is talking about, while 

they are very much needed, how you do it, when you do it, and on 

what basis you do it matters. And from a practical standpoint, you 

have a phased-in implementation approach that is required in your 

legislation. No matter what the Secretary and others at DoD might 

want to do, from a practical standpoint, they will not be able to 

adopt this new system in anything other than a phased approach, 

and from a practical standpoint, I don’t think that the limits that 

you are proposing would represent any significant constraint on 

their real ability to effectuate the type of reforms that they are 

going to need. You have to do it in phases to do it right, and that 

is what we have done at GAO. 

Chairman COLLINS. Thank you. One final question from me, and 

that is DoD has asked to exclude OPM from much of the review 

of its new system, other than a small but minor requirement to 

consult with OPM in the design. Could you tell us whether you 

think OPM, as with the Department of Homeland Security, should 

be involved virtually every step of the way? 

Mr. WALKER. I do believe that OPM has to play an important 

role to provide the type of checks and balances that you need to 

prevent abuse and maximize the chance for success. 

I would also note I have tremendous respect for Secretary Rumsfeld. He and I are both Teddy Roosevelt fans, among other things, 

who, as you know, was the champion of the civil service system. 

But I will tell you that I was extremely disappointed in the process 

that DoD employed to come up with this proposal. There was basically no consultation—of unions, of employees, of their executives, 

and so, therefore, when I see a provision that says that they will 

consult with somebody, with the track record that they employed 

in coming up with this proposal, that doesn’t give me great comfort. 

I think it is important that you either have the provision that 

you have in your bill, which would require that it be a joint effort 

with OPM and DoD, and I think it is fine if you so desire to do 

what the House did, that if there is a stalemate between OPM and 

DoD on a truly national security issue, to take it up to the President. But you need to have an independent third party involved 

and you can’t know going into that discussion that you have the 

trump card before you have entered into consultations and negotiations. There is a fundamental conflict of interest. That would not 

represent adequate checks and balances, in my view. 

Chairman COLLINS. Thank you. Senator Voinovich. 

Senator VOINOVICH. Thank you, Madam Chairman. 

First of all, Mr. Walker, thanks very much for coming back on 

the red eye. I again want to thank you publicly for coming to DayVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00043 Fmt 6633 Sfmt 6601 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
40

ton for the hearing that the Subcommittee held there on this very 

important new endeavor by the Department of Defense to have 

their own personnel system. 

I am interested in your comments about looking beyond the Defense and Homeland Security Departments at the broad range of 

reforms that we ought to be implementing government-wide. The 

Chairman and I have talked about this issue on several occasions, 

and I would really be interested in getting your recommendations 

as you look at what we have done in Homeland Security and what 

we are considering doing in the Department of Defense. I know the 

Securities and Exchange Commission is coming in as well with requests. NASA is pining away to have changes in their personnel 

system which are long overdue and, as a matter of fact, have been 

on your high-risk list now for several years. 

But to look at the general application of some of these things 

across the board so that we don’t have these inconsistencies and 

give these people some of the same flexibilities that some of these 

agencies now have and others want to have. You don’t have to 

launch into them right now, but I would really, and I am sure that, 

Madam Chairman, you would appreciate having those, also. 

The pay-for-performance system, I mentioned that when Secretary Rumsfeld was here. You looked at the provisions of our bill. 

Do you think that the criteria that we have established for performance management in our bill respond to some of the concerns 

that you have had about the rapid advance toward pay-for-performance in the Department of Defense? 

Mr. WALKER. I do. I definitely believe they are a significant improvement. 

Senator VOINOVICH. Would you like to share just a minute with 

us how difficult that is? 

Mr. WALKER. Sure. Let me mention a couple of things. First, the 

hearing in Dayton, by the way, it turned out setting a record. 

There were more hits on our website for a copy of my testimony 

in that hearing in Dayton, Ohio, than any other document in 

GAO’s history, which was interesting. I just found that out. 

Second, I do think it is important that for certain areas like hiring for critical occupations, broad banding, pay for performance, reemployment rights, pension offset, to consider doing that on a government-wide basis, not to slow things down, but to recognize that 

DoD is, first, not the only entity involved in national security, and 

second, not the only entity in the civilian part of the Federal Government that needs these types of flexibilities. We are all in a war 

for talent and we all want to try to win that war and we don’t want 

to try to create unlevel playing fields. 

We are talking about huge cultural transformation here, transformation that is needed, transformation that is long overdue, 

transformation that if your legislation becomes law will be facilitated, because in the final analysis, you can’t transform how government does business unless you transform the government’s 

human capital policies and practices. And while a lot can and 

should be done within the context of current law, quite frankly, 

neither DoD or most Federal agencies have nearly done what they 

should have done under currently law, they do need your help beVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00044 Fmt 6633 Sfmt 6601 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
41

cause there are certain areas where there are practical constraints 

under current law. 

But it will take years for them to effectively design these systems 

for their entire civilian workforce. They will have to do it on an installment basis and they need to involve the key stakeholders to 

a much greater extent than they did in connection with this legislation. 

Senator VOINOVICH. And you also concur, just to underscore, that 

it is very important that OPM continue to be involved here? 

Mr. WALKER. I think it is. I think they provide a certain degree 

of consistency. They provide an independent set of eyes to be able 

to try to help maximize the chance of consistency where there 

ought to be consistency, minimize the possibility of abuse and of 

further Balkanization of the system. 

I do, however, believe that OPM needs to act expeditiously, that 

they need to be able to rule on issues within prescribed time 

frames, and I think that OPM, frankly, has its own cultural transformation challenge, because for many years, OPM was primarily 

a compliance organization. It needs to become more of a consulting 

organization, figure out how to get things done rather than necessarily saying no. 

Senator VOINOVICH. Thank you. 

Chairman COLLINS. Thank you very much. 

Again, I want to thank you, Mr. Walker, for your efforts to be 

here today. I also want to acknowledge that you and your staff 

have been extremely helpful to us as we drafted our bill. We did 

consult very closely with you and looked at previous statements, 

your experience, your recommendations, and that was very valuable. So we look forward to continuing to work with you. 

Mr. WALKER. Thank you. We have great people and I am proud 

to lead them. Thank you. 

Chairman COLLINS. Thank you. 

I would now like to call forward the third and final panel this 

morning. I would like to welcome Bobby Harnage, the National 

President of the American Federation of Government Employees, 

AFL–CIO. As National President of AFGE, Mr. Harnage leads the 

Nation’s largest union, representing approximately 600,000 Federal 

and District of Columbia Government employees belonging to over 

1,100 local units in the United States and overseas. 

It is also a great pleasure to welcome back to the Committee 

today Paul Light, who is Professor of Public Service at New York 

University. He also has a distinguished career that includes serving as a senior staff member on this very Committee. So he has a 

great deal of expertise in the areas of government, bureaucracy, 

civil service, Congress, entitlement programs, government reform, 

and we welcome him back to the Committee today. 

Mr. Harnage, I am going to ask you to come forward with your 

testimony first, and thank you both for being with us. 

42

1The prepared statement of Mr. Harnage appears in the Appendix on page 74. 

TESTIMONY OF BOBBY L. HARNAGE, SR.,1 NATIONAL PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL–CIO 

Mr. HARNAGE. Thank you. At the beginning, on behalf of the 

600,000 Federal and D.C. employees that AFGE represents and including the 200,000 at the Department of Defense, let me thank 

you, Madam Chairman, as well as Senators Levin, Voinovich, and 

Sununu for the numerous changes you have made to the Housepassed version of the Defense Department’s systems proposal. 

Present at this hearing this morning are a large number of 

AFGE local leaders, but also present is the entire National Executive Council of AFGE to show their thanks for the work this Committee has done on this legislation and your leadership. 

While AFGE remains profoundly concerned about both the fairness and the negative economic impact of a pay-for-performance 

system, we are grateful for your willingness to consider our concerns closely and for you taking the time to write legislation that 

substantially restrains the Department’s desire for a blank check 

authority to create a new personnel system. Thank you, Madam 

Chairman and your Committee, for not abrogating your constitutional responsibilities. 

The authorities sought by the Pentagon are very broad and have 

profound implications for the merit principle-based civil service system, including its replacement with a yet-to-be-seen system, designed, implemented, and adjudicated by a political appointee and 

every single one of his future replacements. The risk that this 

system will be politicized and characterized by cronyism in hiring, 

firing, pay, promotion, and discipline are immense. They are predictable, and the ability to mitigate that risk would be minuscule. 

Madam Chairman, I know that my written testimony has been 

entered for the record and it expresses in detail our opposition to 

the DoD legislation, so I will summarize on some key points where 

your bill differs from the House version and hopefully still have 

some time to respond to some of DoD’s comments here this morning. 

Due process—the House lets DoD decide whether or not DoD civilian employees will have due process protection and appeal 

rights. It lets managers suspend, demote, or fire employees, but it 

doesn’t let them go to the MSPB or the EEOC if they have evidence 

that these decisions were based on prejudice, politics, or distortion 

of the facts. The Senate effectively retains these rights and we 

think the Senate is right to keep the third party review. It will go 

a long way in making sure that hiring and firing in DoD is based 

on merit rather than cronyism and politics. 

On collective bargaining, the House lets DoD decide whether 

DoD civilian employees will be able to have union representation 

and collective bargaining. Even if the employees hold an election 

and decide to have a union, under the House-passed legislation, the 

Defense Secretary can effectively negate this election by refusing to 

allow collective bargaining, even when contractor employees 

performing the same job not only have the right to union representation, but have the right to strike. Contractors who have taken ciVerDate 0ct 09 2002 11:31 Dec 01, 2003 Jkt 088252 PO 00000 Frm 00046 Fmt 6633 Sfmt 6601 C:\DOCS\88252.TXT SAFFAIRS PsN: PHOGAN
43

vilian Federal employee jobs and those yet to be privatized, their 

employees will have more rights, more protections than government employees. This is not about national security and it is not 

about flexibility. 

The Senate maintains these basic democratic rights for DoD employees and we commend the Senate for recognizing that hostility 

to employees’ rights is the most basic evidence of mismanagement. 

That employees desire to have a meaningful communication and 

enforceable collective bargaining agreement goes hand-in-hand 

with our Nation’s democratic traditions and the standards of good 

government. 

Pay for performance—although the Senate has proposed some 

parameters for a pay-for-performance system and the House has 

proposed virtually none, AFGE strongly opposes the imposition of 

individualized pay-for-performance plans. Any way you slice it, 

pay-for-performance plans create more problems than they solve, if 

it can be said that they solve anything. 

Madam Chairman, most of the rationale given by DoD for these 

radical and sweeping changes is a failure to accept their management responsibilities. The poor performers they like to refer to are 

nothing more than the results of not providing proper pay under 

FEPCA and not properly training managers to be managers of people and not letting managers be managers. Their reference to the 

problem of hiring is nothing more than the failure to let managers 

manage and bureaucratic systems requiring higher levels of approval. It is not the law and it is not the regulation that is the 

problem. 

The argument that it takes too long to fire someone is sheer rhetoric. It only takes 30 days, at most. The appeals process is long, 

but that is caused by budget restraints, not by the law and not by 

the regulation. The employee is off the rolls during this process and 

certainly would like very much for it to be a shorter period of time. 

The flexibilities that they beg for is a failure to recognize the 

flexibilities they already have. Every example they have given for 

the need of flexibility is a misrepresentation of the facts. They already have them. 

On the comments that I heard this morning, Madam Chairman, 

sometimes if I hear DoD talking, I am reminded about the story 

of the individual that killed their parents and then threw themselves on the mercy of the court because they were an orphan. That 

is very similar to DoD. 

This is not a national security personnel system. National security is added to the title to give it more importance than what it 

deserves. It is nothing but a DoD personnel system. 

So why did we attach it to the authorization bill where it was 

not germane? They attached it to the authorization bill because it 

couldn’t stand on its own merits and they were hoping it would be 

rushed through Congress before Congress took a good look at it, 

and I thank you, Madam Chairman, for ensuring that the Senate 

took its responsibility seriously, where I think the House failed to 

do so. 

On the 300,000 to 320,000 military individuals that should be 

performing civilian jobs, we don’t argue with that point at all and 

we don’t see why there is any problem of identifying those 320,000 

44

people because they were civilian employees first. They changed 

into military positions not because they couldn’t get the job done 

with civilians, but because they wanted to build up the military. 

When you put a military person in a civilian position, it is not more 

efficient, it is less efficient because that military person has more 

obligations than the job to which they are assigned—mess check, 

CQ, drill procedures, training that the civilian employee doesn’t 

have. So it is not more efficient, it is less efficient, but they did it 

because they were building up the military strength at that time, 

converting civilian jobs to military jobs for that sole purpose of career development of the military people, not because the civilians 

couldn’t or wouldn’t do the job. 

And I question how they are going to do this since they claim 

they don’t manage by FTEs, but every time we talk about bringing 

new work in-house instead of automatically privatizing it, they 

can’t bring it back in-house because they don’t have the slots. If 

that is not managing by FTEs, I don’t know what it is. 

I just recently came from a trip out West where I was at 

Kirkland Air Force Base in the science and laboratory research for 

the military. A head of the science department was telling me that 

he wanted to enlarge his laboratory and he was going to build an 

annex to it that would basically double the size of his workforce. 

He had the money, he had the land, but he couldn’t get it through 

because he didn’t have the authorization for the positions. He could 

contract it out tomorrow, but he couldn’t hire the civilian workforce 

that he wanted to match and mirror his current workforce simply 

because he couldn’t get the authorization. It wasn’t the delay in the 

hiring process, it was the delay in the approval to do it that caused 

the delay, and he is still waiting today. He has been waiting for 

almost a year now. 

Eighty-three percent of contractors deployed in the war in Iraq, 

I think we need to take a closer look at that. They have a habit 

of just throwing out numbers to you without giving you the substance of those numbers. Thank goodness Senator Levin asked for 

some specific numbers, and I think they are going to be surprised 

that that percentage is going to greatly reduce. 

But that wasn’t about the civilian workforce not being able to be 

deployed. That was about money. That was about contractors who 

have indirect contacts to the DoD, making millions and millions of 

dollars by going over there instead of civilians going over there. 

The only complaints that I know of that happened during this war 

were two complaints of civilians not being allowed to be deployed 

rather than not wanting to be deployed, and let us look at the 

number of civilians that were deployed in the Gulf War and the 

number of contractors versus the number that were deployed in 

this war on Iraq and see if the number isn’t a tremendously expanded number and, therefore, having to be more contractors and, 

therefore, raising that percentage point. It hasn’t anything to do 

with the war or anything to do with the flexibility of the civilian 

workforce. It has to do with the circumstances of the war. 

And they keep talking about garnishing wages and they are taking 2 years or 10 years about negotiating that. They could have negotiated that at the national level had they wanted to. They chose 

not to, and now they want to use that as an excuse. 

45

1The prepared statement of Mr. Light with an attachment entitled ‘‘In Search of Public Service’’ appears in the Appendix on page 95. 

But Madam Chairman, there is something basically wrong with 

that example, and that is they have access currently to the Federal 

Service Impasse Panel. Why haven’t they used that? They have access to bring this to a head, to a closure at every one of those locations and they fail to do that, and the implications are they know 

they are wrong, their case is weak, and, therefore, they won’t take 

it forward to a third party to get a ruling on it, but yet they want 

to blame the system as the purpose of it. Basically to summarize, 

they say, we are right and we don’t want anybody to question that. 

Let us make the decision. 

Even in their complaints about the MSPB, where 85 percent of 

the cases are sustained, they only lose 15 percent of them, they 

want to argue about that, and let us look at what that says. Maybe 

we ought to do away with the appeals court system. Maybe we 

ought to do away with the Supreme Court system and just try 

somebody in an initial court and then hang them without any appeals process. That is what DoD wants to do with its civilian workforce. Remember, termination is capital punishment in the administrative field. 

So we don’t want to give these people that authority. It doesn’t 

take 5 months to hire anybody. It doesn’t take 18 months to fire 

anybody by regulation or law. It is the bureaucracy that has created that. 

I appreciate Senator Voinovich referring to TSA, the Transportation Security Agency. The chaos that is there now, they can’t 

blame that on the union. They left us out of that picture. We could 

have been in there helping them, telling them, warning them, cautioning them about mistakes that they were making, but we 

weren’t given that ability. But you don’t want to do that with the 

civilian events when it is four or five times the size of the workforce of TSA. 

I thank you very much for this opportunity to testify before this 

Committee and I appreciate you and your Committee’s willingness 

to look very carefully at this legislation and do some of the things 

that are right for the civilian workforce, and I will answer any 

questions you might have. 

Chairman COLLINS. Thank you. Professor Light. 

TESTIMONY OF PAUL C. LIGHT,1 PROFESSOR OF PUBLIC 

SERVICE, NEW YORK UNIVERSITY 

Mr. LIGHT. Thank you for having me before the Committee. It is 

always a pleasure to be in this room. I sat in the back row for a 

long time. I think I did OK afterwards. I didn’t become the Chairman of the Committee, as some staffers have done—— [Laughter.] 

But you never know. 

Let me start by saying that I support the Committee’s effort here 

today to develop and perfect this legislation. I think we have before 

us a good bill. I think it is a very useful contribution to the debate. 

I am an Article I person. I happen to believe that we should have 

a Congress and that we should allow the legislative process to work 

its will. This one, this particular bill has been moving very rapidly 

46

and I appreciate how difficult it is for you to develop any sort of 

a consensus under this time frame and to develop a bipartisan consensus. It is very much in the tradition of this Committee. 

That is not how the House works. That is not how the House has 

ever worked under either party because it is the House, with very 

tight rules and a very large number of members. But this particular Committee has always aimed for bipartisanship. I always 

believed that when you are working on issues like financial management reform and prompt payment that if we couldn’t find bipartisan agreement on these rather unglamorous issues, that we just 

couldn’t get any traction on the floor. Senator Glenn believed that. 

Senator Roth believed that. I know that you believe that and I 

know that Senator Lieberman believes it, as do all of your Members. 

Let me talk about three reasons why I support this particular 

bill. First, it provides a template. It provides a set of instructions 

to other agencies that are now lining up. I mean, the line-up of 

agencies for these kinds of authorities is going to be equal to that 

of a summer blockbuster movie. Everyone wants out. Once Defense 

goes, it is everybody for the gates. 

We already know that agencies have been tunneling out of the 

system in this bill or that bill, and we know that most of them do 

so when they get into trouble. It is usually when an agency falters 

that they get the authorities they need or want to do a better job, 

and here we have an opportunity to say to the Executive Branch, 

here is a template. Much of this bill was developed through the 

Federal Register, near as I can tell, looking at what DoD wanted 

specifically. 

The second point is that this bill is bipartisan. That is so important for actually implementing the legislation once it moves forward. The notion of bipartisanship, as you are going out to talk to 

the workforce about these flexibilities, is an added advantage in actually securing implementation. Having another piece of legislation 

rolling forward that is divided by party, divided by party and sending a message to the workforce that one party supports it and the 

other doesn’t, that is just not good for productivity and the embrace 

of the legislation at the actual front line where you do and deliver 

the services. 

The third point is that I think there are a number of useful provisions in this bill that should speed its implementation. I noted 

today that Charles Abel, who is Assistant Secretary for Personnel 

and Readiness, had said that this bill that the Committee, or that 

the House version of the bill was 75 percent of what they wanted. 

I think the better question for the Committee to ask is, what percentage of the bill do they really need? They are getting 75 percent 

of what they wanted, but perhaps 150 percent of what they need. 

I think what this Committee is trying to do is establish a template 

of needed flexibilities while maintaining safeguards so that employees have some rights of appeal beyond just the managerial dictate. 

I like the issues of managerial, putting the focus on managerial 

ability through the phasing. The China Lake experiment has 

launched a thousand dreams of being out of the current system. 

That is an experiment, actually, that has been very poorly understood and never deeply evaluated. If you have been to China Lake, 

47

you know it is a little bit of a distance from the sort of normal Federal facility. It is an unusual place filled with very talented and 

creative people. 

GAO is a good example of an agency that has taken advantage 

of pay banding and other authorities to really bring itself forward 

in terms of the war for talent quite effectively, but it took a long 

time. It didn’t happen overnight. They actually started without 

some of the systems that they needed in order to move forward 

with pay banding and they worked at it year after year after year, 

and I think right now we would argue that it is a very successful 

example of pay banding implemented, but it took time. 

That is why I like the phasing idea here in the statute. I think 

it is going to be very difficult to do this quickly. I think doing it 

one cut at a time will give you an opportunity to see how it works 

and I support the phasing. 

There is also the scaling-up problem that I just talked about. You 

can’t really imagine going from China Lake to 750,000 employees 

overnight, nor from the 3,500 employees at GAO, who are all 

knowledge workers of a kind, to going to the full DoD workforce 

overnight. 

This said, I believe that the Committee’s version of this legislation represents the kind of bold reform that we need. I believe that 

the choice today for America’s young people is, in terms of public 

service, is clearly placing government in a distant second, at best, 

as an employer, and we need to reassure young people that we can, 

in fact, move quickly, that they will be rewarded for performance, 

that they will be allowed to advance. 

We also need to make sure that the managers who supervise 

them have the ability and the training and the tact to manage 

them well. I would like to say that the performance appraisal system, the hyper-inflated performance appraisal system that we see 

in department after department is a product of manager flexibilities to provide performance appraisals. 

All in all, I am going to summarize here in support of your effort. 

I think that having a bipartisan solution move forward at this particular point in time, in this particular climate, is the way to go. 

I am not the Secretary of Defense, either, but if I were the Secretary of Defense, I would compromise to get that bipartisanship. 

I just think it is worth everything when you are moving forward 

on implementation to be able to say that this was a bipartisan 

agreement rather than the product of one party, one administration. This is going to last for a long time, and to the extent it can 

be bipartisan, I think that is everything to successful implementation. Thank you very much. 

Chairman COLLINS. Thank you very much, Professor. 

I certainly agree with your comments and that has been my goal, 

to craft a bipartisan package. 

My memories of this Committee may even go back further than 

yours. I first started as a staffer here when Senator Percy and Senator Ribicoff were running the Committee, and they, too, had that 

bipartisan approach that has been the hallmark of this Committee’s history and one that we are striving to continue to this day. 

One issue that we haven’t discussed this morning that I would 

like your comments on is the fact that the Department of Defense 

48

is seeking to have for not only this Secretary of Defense, but future 

Secretaries of Defense as well have the authority to exercise very 

broad waivers of chapters in Title 5. This may mean that Secretary 

Rumsfeld may come up with one personnel system, but that a future Secretary of Defense, using the same authority, could come up 

with one that is entirely different. 

To me, that argues for Congress spelling out more specifically in 

legislation the parameters of the system. It also, to me, argues for 

a role for OPM, rather than just granting unilateral, broad authority for this and any future Secretary to waive various chapters of 

Title 5. Could you comment on that issue? 

Mr. LIGHT. Two things here. First, this should not be a referendum on Secretary Rumsfeld or Dr. Chu. I think the world of 

David Chu and I think that there is a great deal of research that 

he draws upon from his experience at RAND that is quite relevant 

to these issues at hand. 

But, in fact, there will be future Secretaries of Defense. One of 

the biggest problems among the seniors that we just finished interviewing at the Center for Public Service at Brookings, which I direct, is the confusion of the process. Young Americans would very 

much like to serve their country. They want to come into government, I believe. But they look at the process and the confusion involved in getting in and they just shy away. They see the Federal 

hiring process, or hiring process in government more generally, as 

both slow and confusing, and I am afraid that as we allow agencies 

to tunnel out without this general template in place, we are just 

going to add to the confusion. 

Young people do not believe they know how to get a job in government even if they want a job in government, and I think that 

you are sending a message to the agencies that here is the template. Go ahead and come back to Congress with your requests 

under this template, I think is extremely useful to the agencies and 

it is also a disciplining kind of force on the Department of Defense. 

I think OPM has made a good faith effort to improve and change 

its culture over the last 5 years, under both the Clinton Administration and under the Bush Administration, and I think that OPM 

can be trusted with this kind of joint custody, if you want to imagine it that way. 

I don’t think, and I don’t believe in unreviewable authorities for 

the Executive Branch. That could be just my instinct as a Title 1 

person, given that Title 1 addresses the Legislative Branch, but I 

really don’t think that the issue of unreviewable authority should 

be taken as a referendum on the Secretary. Frankly, I think this 

is a good piece of legislation in spelling out specifically what that 

Department has asked for. 

Chairman COLLINS. Thank you, Professor. 

Mr. Harnage, I know that you have expressed reservations about 

moving to pay banding and pay-for-performance systems. Are there 

any Federal pay-for-performance approaches that are now in use as 

pilot projects across the Federal Government that you believe have 

been successful and might be good models? 

Mr. HARNAGE. First of all, we think that the scheme should be 

supplement to a fully-funded regular pay system. The example is 

given by GAO, for example, that pay for performance, everybody 

49

gets the across-the-board pay increase annually. What is pooled for 

paying for higher performers is the bonus money and the step increases. But everybody gets it across the board. So we think that 

ought to be an element of any pay for performance, that Congress 

ought to continue ensuring that employees are paid fairly and then 

give the managers the provision to reward exceptional performance. 

But we also are opposed to pitting individual against individual. 

We think it should be more a team approach, and an example is 

Pacer Share, which was at McClellan Air Force Base, where that 

system rewarded everyone, not just a few individuals at the expense of someone else. But everybody, if they reached a certain 

level, if their performance was a certain level, everybody gained, 

everybody profited from that experience. 

But I don’t see the GS system as a system that does not pay for 

performance. In fact, I think it is just the opposite and I believe 

it is given a bad name simply over rhetoric. 

Let us look at what the current system is. It is based on a classification system, it is based on a qualification system, and it is 

based on a performance system. The classification system and the 

qualification system makes sure that you meet these qualifications 

in order to get the job. The classification system is if you do this 

work, you receive this pay. That eliminates discrimination, helped 

eliminate the equal-pay-for-equal-work problem that we had. So it 

was a fair system. 

And then each step increase, and I think the public and maybe 

some Members of Congress have been led to believe that these step 

increases are annually and forever. It takes 18 years to go through 

the step increase process, and if you get promoted, it takes even 

longer. But those step increases, every one of them is certified by 

the manager as that employee has met an acceptable level of competence. That is a performance-based step increase, and they can 

be denied. 

And what we see is now there is a government-wide policy that 

there has not been quality step increases for at least 10 years that 

I am aware of where Federal employees who were high performers 

could be given a quality step increase. That is a step increase outside of the system, outside of the normal process, as a reward. They 

don’t give those anymore. They quit giving them, and that is a bureaucratic policy and that is not a law. 

Chairman COLLINS. Thank you. 

Professor Light, could you answer that question, also? Are there 

particular pay-for-performance pilot projects that you think are 

good models and that have been effective? 

Mr. LIGHT. I agree with Bobby Harnage on the issue of Pacer 

Share. Actually, Pacer Share was arguably the most successful of 

the experiments over the last 15 to 20 years. It was carefully evaluated. There were gains in productivity due to the gain sharing 

model that was used there in which employees kept part of the 

gains from productivity and part of the gain from productivity went 

back to the taxpayers. 

The politics of gain sharing, of course, is quite difficult. The notion is that 100 percent of the money should go to the taxpayers 

and that civil servants should always be giving up the good ideas 

50

for productivity improvement. But Pacer Share was a real success 

story and it is a unit-based, or was a unit-based pay-for-performance system. 

GAO is generally accorded great respect in this regard as having 

developed and implemented an effective pay-for-performance system. It has involved an incredible amount of training. 

I look to Senator Voinovich on this issue because we look at the 

training budgets in Federal agencies and we say, is there the 

money in the training budget to train the managers to use the systems or the flexibilities that we are now giving? 

Frankly, a lot of Federal managers cannot use these authorities 

at this particular moment in time. They need to be trained up on 

this. It is not the front-line employee who needs the training as 

much as the manager in order to give fair appraisals and to use 

the flexibilities that are being considered here thoughtfully and 

without abuse, and that is a training issue to me. 

Chairman COLLINS. Mr. Harnage, before turning to Senator 

Voinovich, I want to ask you one final question, and that is Secretary Rumsfeld testified today that some 320,000 military personnel are performing civilian jobs because the civilian personnel 

system is so rigid that managers at DoD turn to military personnel. 

Would you like to comment on that statement? 

Mr. HARNAGE. I think the Secretary has been badly misinformed 

and just repeated that bad information. First of all, as I said a 

while ago, I believe if you look in history, you will see that those 

300,000 jobs were civilian jobs to begin with, and over the years, 

they were made military positions and it wasn’t because the civilians wouldn’t, or couldn’t do the job. It was because it was career 

development of the military. They were building up the size of the 

military and it was for career development is how that happened. 

Don’t quote me on this, it has been 25 years, but I believe it is 

1426.1 was the DoD directive that said you could not convert civilian positions to military, but they converted 300,000 of them. 

That is not a problem, but if you listen to all of this, not just 

today but what was said yesterday and the day before, they are not 

really saying these 300,000 positions will be Federal civilian positions. They may be contractors. They are just whetting your appetite with their comments. But if you look at some other comments 

that are made in other places, it could be contractors rather than 

Federal civilian workforce. 

And where they talk about contractors that are currently doing 

jobs that should be done by civilians, I think that is right. We have 

been saying that for the last 5 or 10 years, that that has happened. 

But when they try to do it, how do they get around the FTEs? They 

claim they don’t—I heard Dr. Chu say, ‘‘We don’t manage by 

FTEs.’’ I heard him deny that there was OMB control of FTEs. 

But how come Kirkland, the example I gave you a while ago, 

can’t hire the scientists and the technicians and the engineers that 

they need to do that very important research when they already 

have the money and the land if they aren’t controlling it by FTEs? 

That should have already been built. The employees should already 

be in place, but it is not. 

51

So you can’t do that with maybe 50 to 80 employees, but he is 

baiting us for the 300,000. If he can’t handle 80, how is he going 

to handle 300,000? 

Chairman COLLINS. Thank you. Senator Voinovich. 

Senator VOINOVICH. I apologize to you. I had to step out. I had 

a meeting that I just couldn’t get out of and I apologize for not 

being here for your testimony and want to thank both of you for 

being here. 

Bobby, you and I worked a long time together and had some good 

days and bad days, but the thing is that we keep talking and I 

think we have made some progress. 

Paul, you and I have known each other for a while and we thank 

you for all of your input over the last several years on some of 

these issues that have been before us. 

Madam Chairman, I would like our witnesses to comment on 

some of the systemic things that are just not right. For example, 

Professor Light mentioned the issue of training. We talk about 

whole new personnel systems, but if you don’t have the money for 

training, how can you really do the things that need to be done? 

Professor Light, maybe you might just like to comment on that for 

a minute or two. 

Mr. LIGHT. Absolutely. 

Senator VOINOVICH. Let me just go on. Bobby, the issue of 

outsourcing. DoD can talk all they want about the 320,000 military 

personnel positions that are going to be civilianized, and I would 

be interested in more detail on how they all became military people. That is interesting. That is a little different story than we got 

before. We turned them into military because of the fact that we 

didn’t have the flexibility when they were civilians, so we moved 

them to military so we could move them around and have some 

flexibility. 

But we had a situation, Madam Chairman, in Cleveland at 

DFAS where they outsourced work and found out that it was all 

done incorrectly. 

I mentioned the Transportation Security Administration. I visited two of the facilities and spent a couple of hours, and the unhappiness of the employees who are there is tangible. They gave 

the human resource functions to a private company, which didn’t 

even get employees their cards for hospitalization. The agency then 

fired the company that did it. The rumor is that there are almost 

2,000 of those people that we hired that are on the FBI’s ‘‘do not 

hire’’ list. 

This is what happens when you just let agencies do their own 

thing. So Professor, why don’t you comment, and Bobby, I would 

be interested. 

Mr. LIGHT. Let me make three quick comments. One is that I 

don’t care who says that there is an employment ceiling in the Federal Government. I am a short person. That ceiling is very high, 

but there is a ceiling. Some agencies are operating well below ceiling, but when they get close to ceiling, OMB clamps down. 

That leads to a second point, which is that there are really two 

different administrations operating here and Federal employees are 

confused a little bit about who is saying what. OMB is saying one 

thing on outsourcing and competition, and competitive sourcing. 

52

DoD is saying another. Cabinet Secretaries like Secretary Rumsfeld, Secretary Powell, and Secretary Ridge say wonderful things 

about civil servants, and then sometimes you might not hear that 

same rhetoric elsewhere. 

I think the notion of bipartisanship here is important to send the 

signal that this is not a one party issue, that both parties recognize 

that there are needed improvements to be made in the current system. 

I talk to Federal Transportation baggage-passenger screeners all 

the time when I fly. Every time I ask them how happy they are, 

I get a full body search. [Laughter.] 

They stand me aside and—they are not a happy group of campers out there. If you talk to them one-to-one, there is a lot of issue 

out there about what they are getting, not getting by way of training, by way of hours, by way of the promises made. I mean, you 

hear that a lot from them one-to-one. The plural of anecdote is not 

data, but you see and you hear these stories over and over again 

and it starts to add up. 

I would say that the most serious issue in implementing these 

reforms is going to be training. A lot of Federal managers have 

been in the system for a good long time and they have learned how 

to game it. They have learned how to deal with problems of entrylevel salary through quick promotion. They have learned how to 

manipulate the system to help develop and support the workforce 

in many cases. They are the ones who give the hyper-inflated performance appraisals that we often mock at the end of each year. 

They are going to need help implementing this system. Undeniably, this whole thing pivots not on political executives, but on 

what I would guess are about 90,000 supervisors and managers 

and executives in the civil service workforce at DoD. Those are the 

people who are going to make this thing work or they are going to 

have it fail, and if we don’t give them the proper training—if you 

look at GAO by example, the amount of money GAO invested in 

training its managers to do this well, and part of it is just training 

them to have the courage to give fair appraisals to their employees 

when that might not be the easiest thing to do. If you look at the 

training configuration here, that is a very serious obstacle and it 

really concentrates on the manager, not the front-line employee. 

Senator VOINOVICH. And that would argue, wouldn’t it, that you 

would cascade this or do it incrementally rather than just rushing 

off and putting it in place all at once? 

Mr. LIGHT. Right. The cascading is a reasonable approach. I also 

think the joint consultation with OPM is part of it. Let OPM develop—I think that DoD’s human resource operation is pretty good 

and I think the Under Secretary for Personnel and Readiness is the 

best. But OPM has a lot of capacity at its disposal to deal with 

some of these issues I am talking about here, especially as other 

agencies proceed with their requests for these kinds of authorities. 

Senator VOINOVICH. Mr. Harnage. 

Mr. HARNAGE. Yes. Much of, I think, DoD’s problem is the lack 

of training of its civilian workforce. At our executive committee at 

Harvard, I pointed out that the military, every one of them, the 

guy sitting here with the four stars on his shoulders came in at the 

53

entry level and he was trained and given the opportunity to develop over 20, 30 years to get to where he is at. 

The civilian workforce very often is hired to do a job and receives 

very little or no training to stay up with modern times, and that 

goes with managers. Managers need to be trained to be managers 

and people need to be trained on how you handle people. That is 

a part of a management responsibility, but not everybody has it 

when they are promoted to that level, and therefore we have got 

to have that training. You are a big advocate of training, and that 

needs to be more built into any legislation dealing with DoD. 

Most of our problems is the lack of training and the lack of funding. It is not people not wanting to do their job and people not dedicated. The resources that are used in outsourcing are tremendous 

numbers of dollars. If we just stopped that nonsense, the money we 

spent on studying and providing the outsourcing event, if just that 

money was used on training, we would be ten times better trained 

than what we are today. 

But there is one element that I do want to comment on that I 

want to caution the Committee to be careful of. I heard something 

this morning that seemed to be a contradiction, but it also was giving my fears some legitimacy. They said that they don’t intend to 

get rid of unions, they don’t intend to get rid of collective bargaining, they want to work with their unions, although they got 

this far without even talking to us, and they have no reason to get 

rid of you. 

But Senator Fitzgerald talked about those elements of the government that are excluded from the law that gives union recognition and asked Dr. Chu if that was all he was trying to do, was 

get what they already had, and his answer was yes. Now, we are 

talking about entities that are union-free environments, but yet 

they said they don’t intend to do that. They intend to continue collective bargaining. Dr. Chu said they were merely trying to get the 

same. 

I don’t ask that you use your valuable time in trying to clarify 

that. I ask that you use your valuable time to make sure that 

doesn’t happen. Your legislation protects it. Hang in there strong 

on that. That is very important and it is the right thing to do. 

Senator VOINOVICH. Thank you. I just want to better understand 

that. The various agencies that Senator Fitzgerald mentioned when 

he read the statute that were excluded, you are saying that the situation in those agencies is what? And you don’t——

Mr. HARNAGE. They don’t have access to union representation. 

They are excluded. It is waived in the law. And there are some, although I find it very hard to ever justify not having the right all 

Americans have except an excluded few to belong to a union if they 

choose, there are some conflicts of interest. 

I think there probably is a conflict of interest in the FLRA because they are making rulings involving both sides, the union and 

management, and so there would appear to be a conflict of interest. 

MSPB would be the same case, and some investigative fields. The 

FBI, I think, would have been a lot better off if they did have a 

union, but nevertheless, there is that conflict there that some people can see. GAO is an arm of Congress, and so Congress doesn’t 

have a union so it is natural that they excluded GAO. 

54

But I am talking about those areas that the law initially said, 

we don’t think this should apply to these agencies, and Senator 

Fitzgerald was pointing out those agencies and his question to Dr. 

Chu was, isn’t that all you are asking, is to get the same thing they 

got, and his answer was yes. 

Senator VOINOVICH. I think that we ought to try and look into 

that. I would be interested in anything you could provide for us, 

and we can do some research here at the Committee. 

Mr. HARNAGE. Don’t waste your valuable time doing that. Just 

make it impossible for it to happen. [Laughter.] 

Chairman COLLINS. Our bill does. 

I want to thank you very much for your testimony today and for 

the contributions that you have made to this very important debate. 

I again want to recognize Senator Voinovich’s longstanding leadership in this area. He has worked harder than any Member of this 

Senate on human capital issues. He has always been on the forefront of these debates and it has been a great pleasure to work 

closely with him as we develop this legislation and go forward. 

We will be keeping the hearing record open for 15 days for the 

submission of any additional statements or questions. 

I want to thank all of our witnesses for their valuable testimony 

today and I also want to thank our staffs. Senator Voinovich and 

my staff and Senator Levin’s staff have worked very hard to develop this legislation. On my staff in particular, I want to recognize 

the efforts of Ann Fisher, who has had countless discussions with 

AFGE and other people who are interested in this debate. We look 

forward to getting your future input as the Conference Committee 

for the Department of Defense bill goes forward. 

This hearing is now adjourned. 

[Whereupon, at 12:38 p.m., the Committee was adjourned.] 

(55)

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